After announcing the acquisition of Corus's aluminium packaging activities, Pechiney has reported a third-quarter net loss and said its full-year profit would be worse than expected due to weak aluminium prices - according to a report from FT.com.
The €831 million deal with Corus, is aimed at strengthening Pechiney's exposure to the aerospace and automotive components sectors where margins are higher than in primary aluminium production. Aluminium is also the area upon which the majority of Pechiney's extensive food packaging activities have been built.
According to the FT report, operating profit for the period took a heavy beating, from €137 million to €95 million on sales up slightly from €2.75 billion to €3.02 billion. But the group made a net loss of €14 million compared with a net profit of €56 million in the corresponding quarter last year after taking a one-off restructuring charge of €47 million.
Pechiney said that most of the problems with aluminium pricing had been linked to both currency fluctuations - namely with the weakening US dollar - and market over-supply.
Average aluminium prices fell from $1481 (€1514) per tonne in the third quarter of 2001 to $1360 per tonne, while the dollar weakened by 7 per cent against the euro, the FT reported.
Pechiney has now dropped full year profit targets from €549 million to around €400 million.
"The negative trend in the price of aluminium and the parity of the US dollar vis-a-vis the euro will continue to affect the group's results in the last quarter," the company said.
Pechiney said that the deal with Corus will allow it to maximise on synergies, which should lead to substantial operational savings. Furthermore it is estimated that its continuous improvement programmed should also increase operational earnings by around €450 million over the course of the next two years.