Constellium Faces Decline in Q3 Revenue Amid Market Challenges
France-based Constellium has reported a downturn in its financial performance for the third quarter of 2023, underscoring the challenges it faces in a tumultuous market.
According to its latest earnings report, the aluminum products manufacturer saw a 15% decrease in revenue, with earnings down to 1.7 billion euros. This decline coincided with a 5% drop in shipments compared to the same period in 2022. Despite these setbacks, the company recorded a slight uptick in its Value Added Revenue (VAR), posting a 5% increase, which translates to a figure of 704 million euros.
While the company's net income showed a stark decline from 131 million euros in Q3 2022 to 64 million euros, its Adjusted EBITDA witnessed a modest 5% growth, standing at 168 million euros. This financial ambiguity extended to its cash flow operations, with the free cash flow dipping to 78 million euros.
CEO Jean-Marc Germain highlighted the persistent inflationary pressures and weak demand in various markets as significant hurdles. However, he noted, "Constellium delivered a strong performance in the third quarter, achieving a record Adjusted EBITDA, thanks to demand resilience in the aerospace sector and automotive market, despite some softening.
"For the broader nine-month period ending September 30, 2023, the company's shipments were down by 5%, and revenue saw a 10% contraction compared to 2022. But it wasn't all downward trends; the VAR marked an 11% growth, and the Adjusted EBITDA improved by 3%.Germain remains cautiously optimistic for the remainder of 2023, expecting the current market demand trends to persist. The company maintains its Adjusted EBITDA forecast for the year, aiming for a target in the 700 to 720 million euro range and hoping for a free cash flow exceeding 150 million euros.
These projections come amidst the complex economic landscape and the anticipated impacts following the automotive workers' union strike in the fourth quarter. While acknowledging the uncertainties ahead, Constellium emphasizes its commitment to navigating these challenges and driving shareholder value.
Constellium's report underlines the volatile nature of the market and the aluminum industry, particularly under current global economic conditions, and sets a tentative tone for what's to come in the last quarter of the year.
