Benzinga | Feb 24, 2021 04:47PM EST

Kaiser Aluminum Sees FY21 Value Added Revenue Up 5-10%

2021 Outlook

"For the full year 2021, we anticipate total value added revenue up 5% to 10% year-over-year and an adjusted EBITDA margin comparable to 2020 driven by strong growth in automotive, defense and general engineering applications," stated Mr. Harvey.

The Company anticipates value added revenue for the Company's aerospace/high strength applications to be down 5% to 8% year-over-year on slightly lower shipments compared to 2020, which reflected strong demand for our commercial aerospace applications during the first half of 2020. Commercial aerospace demand continues to reflect weak airline travel impacted by the pandemic and destocking in the supply chain. The Company continues to anticipate full recovery of commercial aerospace in 2023-2024.

Lower commercial aerospace demand in 2021 is expected to be mitigated in part by continued strength in demand for defense applications as build rates for the F-35 Joint Strike Fighter are expected to increase 20% to 30% compared to the prior year while business and regional jet demand continues to improve.

Value added revenue and shipments for the Company's automotive extrusion applications are anticipated to increase 35% to 45% year-over-year as North American build rates are expected to increase more than 25% to approximately 16 million units in 2021 from 13 million units in 2020, and numerous new product launches in 2020 and 2021 increase the Company's aluminum content on vehicles.

General engineering value added revenue and shipments are anticipated to increase 10% to 15% year-over-year reflecting solid service center and end market demand driven by continued growth in semi-conductor and automotive demand. In addition, reshoring continues as many North American OEM's secure domestic supply for their raw material needs to minimize risk of supply chain disruption.

"Our planned acquisition of Alcoa Warrick LLC provides an opportunity for further value creation with strong secular growth in the non-cyclic packaging business," stated Mr. Harvey. "The transaction is anticipated to close on March 31, 2021 and is expected to be immediately accretive to earnings and cash flow. The outlook for the beverage and food packaging markets is strong with favorable demand and industry dynamics driving growth. North American can demand was up 5% year-over-year in 2020 and is projected to increase an additional 3% to 5% in 2021. The Warrick rolling mill is one of only four dedicated can sheet mills in North America and we expect to become a significant participant in the supply chain solution in meeting the growing North American demand. We will provide a further update on our consolidated full year outlook for 2021 during our first quarter earnings call in April 2021," concluded Mr. Harvey.