Aluminum Manufacturing
Finance & Investment Club
Materials Sector
Fall 2014
Senior Analyst: Joo Sung Kim
Junior Analysts: TBD
Aluminum Industry

Companies in this industry manufacture aluminum and aluminum products from either original or
recycled material

Products are used in vehicle frames, residential construction and medical equipment.

Successful companies are those that manage to achieve highest economies of scale through size, or
technical superiority through advanced furnace technology.
Century Aluminum
NASDAQ: CENX
Kaiser Aluminum
NASDAQ: KALU
Constellium
Aluminum
NYSE: CSTM
Reliance Steel
NYSE: RS
Alumina Limited
OTC: AWCMY
Alcoa Aluminum
NYSE: AA
Industry Breakdown
Materials Sector
($2,000B)
Metals and
Mining
($674.02B) =
33.70%
Company
Ticker
Market Cap (in $B))
Century
CENX
2.45
Kaiser
KALU
1.28
Constellium
CTSM
2.23
Reliance
RS
5.03
Alumina
AWCMY
4.21
Alcoa
AA
19.97
Market Cap Size Comparison ($B)
1.28
2.45
2.23
5.03
Aluminum
($107B) =
15.87%
19.97
4.21
Century Aluminum Co. (CENX)
Kaiser Aluminum Corporation (KALU)
Constellium N.V (CTSM)
Reliance Steep & Alumimum (RS)
Alumina Limited (ADR)- (AWCMY)
Alcoa (AA)
Industry Summary
2014 Industry Overview
$35.0B
Total Revenue
Profit
$1.7B
Annual Revenue
Growth
4.7%
414
Number of Businesses
Revenue Segmentation by Product
3 2.5
13
42
17
22.5
Aluminum Sheet, Plate, Foil
Secondary Aluminum
Aluminum Extrusions
Primary Aluminum
Alumina
Other
Business Model: Aluminum Manufacturing
Industry
Smelting
Product
Diversificatio
n
Raw
Material
Sourcing
Recycling
Sales to
Customers
Trends
Growth in Demand
Industries
Stable Aluminum Price
Improving Domestic
Competition
Growth of Demand Industries
• Metal Can Manufacturing
industry 0.76% CAGR ’10’14  0.53% CAGR ‘15’19Metal Can Manufacturing Annual
Revenue ($)
22,000.00
Revenue
CAGR 0.76%
Automobile Manufacturing Annual
Revenue
CAGR 0.67%
CAGR 4.97%
Revenue ($)
• Automobile
Manufacturing industry
4.97% CAGR ‘10-’14 
0.67% CAGR ‘15-’19
140,000.00
120,000.00
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
-
CAGR 0.53%
21,000.00
20,000.00
19,000.00
18,000.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year
• Stable or increasing
growth from demand
industries  positive
forecast for aluminum
industry
17,000.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year
Source: IBISWorld
• Predictable revenue for
aluminum industry
Stable Aluminum Price
570
560
Number of Plants
• Total number of active
plants fell by CAGR 1.5%
in 2010-2014
• Number of active plants
forecasted increase by
CAGR 0.71% for 20142018
Number of Aluminum Plants
550
540
530
520
510
500
2010
1.4
1.2
Price
1
0.8
0.6
0.4
0.2
0
2012
2013
Years
2012
2013
2014
2015
2016
2017
2018
Years
World Aluminum Prices
2011
2011
2014
• Fall of aluminum price
near
slowdown/recovery
• LME Benchmark
aluminum price
increase 27% at end of
August
Improving Domestic Competition
Exports ($M)
10000
• Increasing globalization
means expected
increase in aluminum
exports over next 5
years
9000
CAGR 3.71%
CAGR 3.62%
8000
Export
7000
6000
5000
4000
3000
2000
1000
0
2010
16000
CAGR 2.69%
CAGR 0.99%
14000
Import
13000
12000
11000
10000
9000
8000
2010
2011
2012
2013
2014
2015
Year
2012
2013
2014
2015
2016
2017
2018
2019
Year
Imports ($M)
15000
2011
2016
2017
2018
2019
• Increasing share of
domestic demand
fulfilled by imported
aluminum
• High industry assistance
caps import affect
domestic production
Industry-wide Risks
• Industry overcapacity and excess supply
• Supply from developing countries may develop quicker than actual
demand in their economies, thereby over-flooding the market and driving
down profits
• Increased competition from alternative materials
• Designers and engineers increase usage of lightweight materials such as
aluminum, composite materials and plastics
• Especially prevalent in automotive industry due to strict regulations
regarding safety and efficiency
• Increased environmental regulation
• Production facilities may need to undergo capital-intensive restructuring
and increase operating costs in order to comply with new regulations
• Limited availability of raw materials
• Problems with suppliers related to delays, defaults or limited supply
adversely affect production by decreasing efficiency and increasing costs
Source: Company 10-
Key Financials
Market
Share Price
Cap
P/E
Volume
EPS
Beta
Net
Income
2.45 B
67.13
804 K
0.41
2.36
36.81 M
121.29 M
2.77
4.06
72.65
1.28 B
16.46
515 K
4.41
1.02
83.50 M
258.60 M
5.2
7.61
NYSE
21.13
2.23 B
13.65
1030 K
1.55
0.49 (?)
162.13 M 367.92 M
7.93
N/A
Reliance
Steel &
Alumimum
(RS)
NYSE
64.42
5.03 B
14.86
884 K
4.34
1.73
341.00 M 829.10 M
4.99
8.68
Alumina
Limited
(ADR)(AWCMY)
OTC
5.96
4.21 B
--
42 K
-0.06
1.36
-44.50 M
N/A
-0.35
-1.54
Alcoa (AA)
NYSE
16.94
19.97B
--
2103 K
-1.98
1.07
-2.14 M
1.36 M
2.89
-14.5
Company
Index
Century
Aluminum
Co. (CENX)
Nasdaq
27.53
Kaiser
Aluminum
Corporatio
n (KALU)
Nasdaq
Constelliu
m N.V
(CSTM)
EBITDA
ROA (%)
ROE (%)
Industry Rating
Aluminum Manufacturing Industry Rating:
Overweight
Improving demand and high industry assistance give the industry a positive
outlook
1. Industry Outlook
• Strong revenue growth due to increasing demand for materials from demand
industries
• Increasing globalization raises exports but imports kept under control by high
tariffs for nearly all aluminum products
2. Industry Risk Factors
•
•
Profits may decrease due to falling aluminum prices from an inundated
market
Loss of revenue as demand industries explore alternative materials