Kaiser Q2 earns fall on aluminum weakness
By David Howard Sinkman
NEW YORK, July 24 (Reuters) - Kaiser Aluminum Corp. (NYSE:KLU) posted a second-quarter loss on lower sales and prices Tuesday, reversing a year-ago profit, and said it was reviewing its debt maturities and capital structure.
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``The results were certainly bad, but no worse than people thought they would be,'' said BB&T Capital Markets analyst Lloyd O'Carroll. ``They just need to get all their operations up and running.''
The Houston-based company said that it lost $19.7 million, or 25 cents a share, excluding charges, compared with earnings of $6.4 million, or 8 cents a share, a year ago.
Including special items for asbestos liabilities and start-up costs at its Gramercy alumina refining operations in Louisiana, Kaiser lost $64.1 million, or 80 cents a share. The company posted earnings of $11 million, or 4 cents a share, including special items, in the year-ago period.
Wall Street expected the company to lose between 23 cents and 31 cents a share, with a consensus estimate of a loss of 25 cents a share, according to tracking firm Thomson Financial/First Call.
Revenues dropped 19 percent to $446.8 million from $552.8 million.
Kaiser said its $300 million credit agreement had been extended to Nov. 2 from its Aug 15. expiration. Analysts called it a positive move, but not unexpected.
Chief Executive Officer Raymond Milchovich said in a conference call that Kaiser would book about $40 million in power sales to the Bonneville Power Administration (BPA) in the second half of 2001. Most of the power sales, which come from contracted power sold back to the BPA, will be in the third quarter.
Milchovich said third-quarter earnings would be flat to higher and largely shaped by commodity prices and production at its Gramercy operations.
The company said it will receive $35 million in the second half of 2001 on an insurance settlement due to interruptions at its Gramercy operations. Kaiser spokesman Scott Lamb said full production at Gramercy was expected by the end of 2001 or early 2002.
Shares in Kaiser slid almost 6.6 percent, or 26 cents, to close Tuesday at $3.69 on the New York Stock Exchange.
``There was nothing unusual or surprising in Kaiser's results. The stock is suffering from a market correction,'' said Merrill Lynch analyst Daniel Roling.
Kaiser shares rose 4.2 percent in the second quarter, compared with a 5.52 percent rise in the S&P 500 index. The stock is off its 52-week high of $6.0625.