Kaiser Aluminum 2025 mix shift sets up 2026 plate and coated sheet growth

End-market performance diverged, with aerospace volumes pressured by OEM destocking and packaging shifted toward higher-value coated products, setting up a 2026 outlook that foresees renewed volume growth.

Shipments

Aerospace and high strength

Management said the second half of 2025 skewed toward higher-priced extrusions because plate capacity was offline.

Full-year aerospace and high-strength shipments declined 16% to 204.8 million lbs, while fourth-quarter deliveries fell 23% to 46.8 million lbs.

Commercial aerospace destocking began easing exiting 2025, and management expects 2026 aerospace shipments to rise 10-15%, implying around 225 million lbs to 236 million lbs, with conversion revenue increasing 5-10%. Importantly, conversion revenue per pound is expected to normalize as plate volumes recover.

Separately, management noted on the earnings call that renewed semiconductor demand has begun to reappear and is expected to support flat-rolled capacity at the company’s Trentwood mill in Washington.

Packaging

Packaging shipments totaled 560.5 million lbs for the year, down 5%, while fourth-quarter tonnages declined 7% to 136.4 million lbs.

Segment conversion revenue increased 11% to $544 million despite a 32 million lb shipment decline during the transition to coated products. The fourth coating line at Kaiser’s Warrick plant is now fully commissioned, and approximately 75% of packaging volumes are coated products.

In 2026, management expects shipments to increase 5% to 10%, or roughly 589 million to 617 million lbs, and conversion revenue to increase 15% to 20%. The wide spread between revenue and volume reflects higher revenue per pound tied to coated mix and contractual pricing.

When asked why aerospace shows shipment growth exceeding conversion revenue growth while packaging shows the reverse, management said aerospace will see plate volumes return, lowering average revenue per pound from a temporary extrusion-heavy mix. Packaging, by contrast, continues to shift toward coated products, which carry higher conversion revenue per pound as the new line ramps up.

Executives also noted that food packaging demand is running at high single-digit growth rates, and the company can place essentially all coated capacity into the market.

General engineering

General engineering shipments increased 6% to 247.5 million lbs for the year, while fourth-quarter volumes rose 4% to 63.5 million lbs.

Full-year segment conversion revenue rose 4% to $331 million on a 6% shipment increase. Management attributed the growth to tariff-driven reshoring and demand for Kaiser Select products.

For 2026, shipments and conversion revenue are expected to increase 3% to 5%. Customer inventories remain low, and semiconductor-related demand has begun to increase after a prolonged slowdown.

Automotive extrusions

Automotive extrusions shipments declined 6% to 95.4 million lbs for the year, while fourth-quarter shipments fell 9% to 27.3 million lbs.

Full-year conversion revenue increased 2% to $122 million despite a 6% shipment declined. Pricing and mix offset lower volumes in 2025.

In 2026, both shipment and conversion revenue are projected to decline 5% to 10%. Management attributed that decline to planned outages, most notably at the Bellwood facility in Virginia, as the company retools specialty products tied to internal combustion engine trucks and SUVs.

Executives described the capacity addition as incremental rather than displacing other markets. The company plans to take temporary outages in 2026 to prepare for higher specialty output beginning in 2027.

Management said the products involved carry high margins and that Kaiser holds a near-exclusive supply position. Customers are currently substituting steel in some applications because aluminum capacity is constrained, and the investment aims to address that gap.

The additional automotive spending drives 2026 capital expenditures to a range of $120 million to $130 million. Absent the automotive initiative, capital spending would have been closer to $100 million to $112 million, management said.

Financials

Full-year sales increased nearly 12% to $3.4 billion from 2024. Adjusted EBITDA rose to $310 million from $241 million a year earlier, even as shipments declined, lifting margin to 21.3% of conversion revenue from 16.6% in the prior year period.

Fourth-quarter net sales increased 21% to $929 million. Adjusted EBITDA totaled $88 million, up from $67 million in the previous year, with margin expanding to 24.1% from 18.6% despite lower year-over-year quarterly shipments.

The divergence between shipments and conversion revenue defined the year. In several segments, mix and pricing offset lower volumes. In others, temporary outages and customer destocking weighed on revenue per pound.

Metal lag contributed approximately $93 million to full-year 2025 EBITDA, compared with $45 million in 2024. In the fourth quarter alone, metal lag contributed $29 million versus $14 million in the previous year period. Management emphasized that 2026 guidance does not assume a continuation of such pricing tailwinds.

As a result, while fourth-quarter sales and EBITDA accelerated relative to the full year, net income gains were more pronounced across 2025 as a whole. Full-year net income climbed to $113 million from $66 million, compared with the fourth quarter, which increased to $28 million from $20 million.

Looking ahead

Kaiser’s plate capacity is fully online at Trentwood, coated capacity ramping at Warrick, and specialty automotive output positioned to expand in 2027.

Executives on the earnings call said bookings across major end markets remain stable, and no demand destruction has been observed despite elevated aluminum prices.

While metal price lag contributed materially to 2025 earnings, next year’s performance is expected to rely more heavily on throughput and product mix.

Shipment growth in aerospace and packaging, combined with higher coated utilization rates, will likely determine the trajectory of margins across segments.