PARIS – Constellium SE (NYSE: NYSE: ), a leading manufacturer of innovative aluminum products with a market capitalization of $1.49 billion, announced today its plan to voluntarily file financial reports using the forms of US domestic issuers. Starting this year, the company will present its annual, quarterly and current reports in accordance with the requirements of the US Securities and Exchange Commission (SEC) for domestic filers. According to InvestingPro data, the company has maintained profitability over the past twelve months despite challenging market conditions.
The CEO of Constellium, Jean-Marc Germain, expressed that this strategic move is expected to increase the transparency and comparability of the company’s financial results with American competitors. This transition is seen as a step towards potentially increasing shareholder value by improving eligibility for inclusion in certain equity indices and expanding strategic flexibility.
The company, which previously reported its financial data in euros and under International Financial Reporting Standards (IFRS), will now issue financial statements in US dollars and in accordance with US GAAP. Constellium will restate its historical figures for the full years of 2022 and 2023, as well as the first three quarters of 2024, to reflect this change. The move comes as the company’s shares are hovering near a 52-week low of $9.95, with InvestingPro analysis that suggests the stock is currently undervalued based on the fair value estimate.
Key changes since the transition to US GAAP include adjustments to the reporting of operating leases, factoring, goodwill impairment, and pensions and other long-term benefits. The company detailed the expected effects on selected financial items for the full year 2023, noting that they are unaudited and subject to change.
The change in reporting standards is expected to affect various aspects of Constellium’s financial disclosures, including the income statement, balance sheet and cash flow statement. For example, operating lease costs will now be classified within cost of sales and SG&A, and factoring fees will be recorded in SG&A rather than finance costs.
The Company also anticipates adjustments related to the impairment of goodwill and the reversal of the impairment of property, plant and equipment in Muscle Shoals, which will result in a net decrease in total assets and equity. Furthermore, the changes in pension accrual will lead to the amortization of past service costs over the employee’s remaining service under US GAAP, as opposed to immediate recognition under IFRS.
This announcement is based on a press release and should be considered in the context of risks and uncertainties identified by Constellium, including market competition, economic conditions and geopolitical tensions. The company maintains a global presence, with $7.8 billion in revenue by 2023, serving industries such as aerospace, automotive and packaging. InvestingPro subscribers can access detailed financial health metrics, including the company’s impressive free cash flow yield and comprehensive valuation analysis, along with 8 additional ProTips that provide deeper insight into the company’s financial position.
In other recent news, aluminum products maker Constellium faced some challenges after third-quarter results that fell short of expectations. And BMO Capital and Deutsche Bank (ETR:) responded to these developments by adjusting their stance on the company’s stock. BMO Capital cut their price target from $22.00 to $18.00, maintaining an Outperform rating, while Deutsche Bank downgraded Constellium from Buy to Hold and significantly cut their price target on the stock to $12 from $22 previously.
These adjustments were driven by lower demand in most of Constellium’s markets, which led to a 5% year-on-year drop in shipments to 352,000 tonnes and a 5% decrease in revenue to EUR 1.6 billion. The company reported a net income of 3 million euros. In response to these challenges, Constellium revised its adjusted EBITDA guidance for 2024 to EUR 580-600 million.
Despite these difficulties, Constellium remains committed to safety, cost management and strategic growth. The company also bought back 1.2 million shares for US$21 million in the third quarter and began operations at its new recycling and casting center in Neuf-Brisach ahead of schedule. These are among the recent developments for Constellium as it navigates the current market challenges.
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