CENX

Century Aluminum Company (CENX)

$24.6
*  
0.30
1.23%
Get CENX Alerts
*Delayed - data as of Oct. 20, 2014  -  Find a broker to begin trading CENX now
Exchange: NASDAQ
Industry: Basic Industries
Community Rating:
View:    CENX Pre-Market
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save stocks for next time

Century Aluminum Co. (CENX)

Q4 2008 Earnings Call

February 19, 2009 5:00pm ET

Executives

Shelly Lair – Vice President & Treasurer.

Logan W. Kruger – President & Chief Executive Officer.

Wayne R. Hale – Executive Vice President & Chief Operating Officer.

Michael A. Bless – Executive Vice President & Chief Financial Officer.

Analysts

Kuni Chen – Banc of America

David Gagliano – Credit Suisse

John Tumazos - Very Independent

John Tumazos – Very Independent

Mark Liinamaa – Morgan Stanley

Martin Pollack – NWQ Investment Management

Anthony Rizzuto – Dahlman Rose & Co.

Matt Mylam – Seneca Capital

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2008 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would like to now turn over your conference call to your host, Ms. Shelly Lair. Please go ahead.

Shelly Lair

Thank you, Ann. Good afternoon everyone, and welcome to the conference call. For those of you joining us by telephone, this presentation is being webcast on the Century Aluminum website, www.centuryaluminum.com. Please note that website participants have the ability to advance their own slides.

The following presentation, accompanying press release and comments, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Century's actual results or actions may differ materially from those projected in these forward-looking statements. These forward-looking statements are based on our current expectations and we assume no obligation to update these statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

For the risks related to these forward-looking statements, please review Annex A and our periodic SEC filings, including the Risk Factors and Management's Discussion and Analysis sections on our latest annual report and quarterly reports.

I'd now like to introduce Logan Kruger, Century's President and Chief Executive Officer.

Logan W. Kruger

Thank you, Shelly. Welcome, to the fourth quarter conference call. Joining me today are Wayne Hale and Mike Bless. Let me move on to the slide number four.

We're managing through extraordinary and difficult times. The crisis in the financial and credit markets has led to a pronounced downturn in the global economic activities. The global market for commodities has deteriorated in line with the decline in the global economy consumers throughout the developed world are retrenching in response to the downturn and severe shortages of credit. Governments have taken on the role of spenders and lenders. The Aluminum industry has announced significant production curtailments. So far, a total of $6.5 million ton per year of production cutbacks has been announced of which some $3.5 million tons per year are in China.

This represents 16% of capacity, but many of the closures have yet to be implemented and further production curtailments must occur to offset declining demand. Our first priority at Century is to protect our existing business as we continue to believe in the long-term fundamentals for the Aluminum industry are sound. Our focus is on preserving the value of our assets, so that we will emerge from the downturn with a strong platform on which to grow.

Our smelters in Iceland and the U.S. continue to operate well. We have the leadership team at the plants focused hard on cash flow and we have hold on all discretionary spending in the U.S. and Grundartangi. Grundartangi in Iceland continues to exceed its rated capacity and produce records amounts of metal. Iceland’s political and economic environment has had little impact on Grundartangi, but the environment in the country will be difficult for the next years due to negative economic growth, inflation, and unemployment recent progress as we made in restoring stability in the economy and financial markets as financing packages have been put in place. Banks have been recapitalized and the foreign exchange market has been partially reopened.

We continue to plan to aggressively implement restructuring actions across the country to improve our financial position during these difficult economic times. We have concluded the orderly go climate of the remaining plant operations at Ravenswood in West Virginia and we are taking a critical look at all of our U.S. operations, which Wayne will detail later. We continue to look for at opportunities to reduce cost across the country and improve our liquidity position overtime.

The recent common stock offering will allow us to consider cost reduction and other alternatives including additional curtailments of production capacity from a greater traditional strengths.

If we move on to slide 5, declining demand for aluminum products in developed and developing nations, increasing stock from the LME and other locations and a general lack of confidence in the future economic conditions has combined to produce an unprecedented decline in the LME price of aluminum.

The average prices fallen some 60% from a got at the year ago to February this year. the LME has been a slow as $1280 per ton cash recently. The U.S. market remains subdued and the Midwest premium continues to be in the $0.04 range. Inventories have been increasing dramatically since last fall and now equivalent to 53 days of global demand, similar to the peak days inventory level at the last downturn in the early part of this decade.

Current metal prices reflects similar levels as we have seen in 2002. But, as you all know the cost structure for the aluminum producers today is significantly higher.

We move on to slide number 6. At current primary aluminum prices we believe at least three quarters of the global primary aluminum capacity is operating below cash break-even. While this has lead to significant production curtailments, the industry experts believe supply still outrage as weakened demand as confirmed by the increase in the aluminum inventories. We do not believe that the aluminum prices at these levels are sustainable. We owe but the very lowest cost producers all operating at a loss, but current prices could persist for sometime until the economy regains confidence and demands pickup and we are planning our business accordingly.

We’ll move on to slide 7. During the last several months the primary aluminum industry has responded to the declining metal prices significant production capacity has been curtailed or scheduled for curtailment $6.5 million tonnes of production capacity representing 16% of the 2008 global production capacity has been announced for closure in 2009.

I would like to note in addition to this some $17 million tonnes of alumina production capacity has been announced for closure as well. We believe more production curtailments in alumina and aluminum will be forthcoming. We continue to expect more cuts as China has the majority of the smelters continue to operate with negative cash flows. Shanghai prices has stabilized at somewhat higher levels in the aluminum price, mainly due to government actions both on the strategic stock volume and taxes. And as a result it is believed that production cuts in China will now slow.

Read the rest of this transcript for free on seekingalpha.com