Shares of Constellium (CSTM 2.06%) fell as much as 13% early Wednesday, then settled to close down around 7.8% after the aluminum products company announced weaker-than-expected quarterly results.
NYSE: CSTM
Key Data Points
A "strong" quarter for Constellium despite demand headwinds
For its third quarter of 2023, Constellium's revenue declined 15% year over year to 1.72 billion euros (or around $1.82 billion), translating to net income of 64 million euros, or around $0.43 euros per diluted share. Analysts, on average, were modeling earnings of 0.45 euros per share on higher revenue of 1.8 billion euros.
Delving deeper into Constellium's results, shipments in the third quarter declined 5% year over year to 369,000 metric tons, more than offsetting a 5% increase in value-added products revenue to 704 million euros. Trending toward the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 5% year over year to 168 million euros.
Even so, Constellium CEO Jean-Marc Germain called it a "strong" quarter in spite of inflationary pressure and demand headwinds from several end markets. While aerospace industry demand remains strong, he elaborated, it was more than offset by decelerated growth from the automotive sector and lower packaging shipments. Constellium also continues to see weakness in "most industrial markets, especially in Europe."
Is Constellium stock a buy now?
If that wasn't enough, Constellium expects current demand trends to persist through at least the remainder of 2023, including a modest negative impact to fourth-quarter results from the United Auto Workers union strike. The company reiterated its outlook for full-year 2023 adjusted EBITDA in the range of 700 million euros to 720 million euros, with free cash flow of at least 150 million euros.
In the end, Constellium remains a solid business that's well positioned to benefit when broad demand improves for aluminum products. For now, however, I'm content remaining on the sidelines here; there are plenty of other compelling stocks already operating from positions of strength in which I could put my money to work.
