Arconic's Q4 2020 aluminum sales slide 14% on year on weak aerospace demand

Pittsburgh — Arconic's aluminum sales in the fourth quarter of 2020 dropped 14% year on year to $1.5 billion as demand strength in the industrial and packaging end markets was unable to fully compensate for weak shipments to the aerospace industry, company CEO Timothy Donald Myers said Feb. 23.

"Large commercial aircraft build rates remain soft as uncertainty in the airline industry continues to curb demand," Myers said during an earnings call with investors. "As a result, elevated inventory in the supply chain and subsequent destocking is driving the decline in our sales, and we anticipate destocking to keep our sales depressed year-on-year through the first half of 2021."

The aluminum roller saw aerospace sales decline about 60% in October-December 2020 compared with Q4 2019 numbers. Conversely, the company's shipment revenue by end-market in the quarter rose 7% year on year for both packaging and industrial products.

Myers said Arconic was prepared to take greater advantage of industrial product sales in 2021 pending the favorable outcome of an ongoing common alloy aluminum sheet trade case that is targeting allegedly dumped and subsidized imports from 18 countries.

"If this trade case produces a similar result to the actions levied against China in 2018, we expect imports to decline by more than 1 billion lb," the executive added.

Arconic is also positioned to capitalize on the packaging market in 2022 with new capacity coming online to serve beverage can demand.

"We're bringing our Tennessee can sheet facility back online and are executing multiple qualification runs with packaging customers to support new volumes in 2022 and beyond," Myers said. "Our timing is good as surging aluminum packaging demand has driven multiple recently announced capacity additions by North American can makers, resulting in increased demand for our can sheet."

Arconic recorded a net loss of $64 million in Q4, falling from a $168 million profit in the year-prior quarter.

For full-year 2020, the Pittsburgh-based company posted a $109 million loss on sales of $5.7 billion, compared with an income of $177 million on $7.3 billion revenue in 2019.

Myers said the full-year performance was negatively impacted by the coronavirus pandemic and production declines due to delays associated with the Boeing 737 MAX.