Kaiser braces for impact after Boeing cuts

Boeing's cutback in 737 MAX aircraft production following crash investigations will introduce uncertainty into the US aerospace market going forward, said Kaiser Aluminum chief executive Jack Hockema.

"While it is likely that the reduced build rates will eventually lead to some level of supply chain destocking, the amount and timing are uncertain until the situation is resolved," said Hockema in Kaiser's earnings release yesterday.

Aluminum products used in large commercial airframes for manufacturers such as Boeing make up 60pc of Kaiser's aerospace and high strength revenue stream.

But the company will not revise its 2019 outlook downward following the Boeing issues unless "specific information to warrant a change" surfaces, said Hockema.

The aluminum rolling mill still expects low-to-mid single digit percent growth year over year in shipments and revenue for 2019.

First quarter shipments declined by 1.8pc to 166mn lbs from a year earlier, despite a 17pc increase in aerospace and high-strength application volumes. Automotive extrusion volumes fell by 4pc over the same period as some vehicle programs ended.

Revenue rose by 2pc to $395mn from a year earlier, as a 4pc increase in average selling prices offset lower shipments. Value-added revenue, or sales adjusted for commodity-sensitive metal costs, rose by 7pc to $218mn.

First quarter profits were up by 8pc at $28mn from a year earlier.