Kaiser Aluminum looking for acquisition in slump

NEW YORK Feb 18 (Reuters) - Kaiser Aluminum Corp (KALU.O) said on Wednesday it is on the lookout for acquisitions at a time when the industry is struggling with low prices and depressed demand in a global economic slump.

"If the economic distress continues, there could be opportunities on the horizon," President, Chairman and Chief Executive Officer Jack Hockema told Wall Street analysts.

"We continue to look for complementary acquisitions that would add value," he said, when asked if the recession presented takeover opportunities for Kaiser Aluminum.

Hockema said Kaiser was close to acquiring some small operators, or "bolt-ons" in recent months. "We could be seeing some bigger ones that come along and we will be evaluating them."

Just last week, Aleris International Inc, an aluminum recycler which produces rolled products and extrusions, filed for Chapter 11 bankruptcy protection for its U.S. operations.

The privately-held company said it did so because of financial constraints from deteriorating demand, earnings, and liquidity caused by global economic conditions.

Base metal prices and the global aluminum industry have been hit hard by the economic downturn, especially in the U.S. housing market and auto sales. London Metal Exchange benchmark three-month aluminum prices MAL3 have tumbled off a record high of $3,375 per tonne last July to around $1,330.

The severe and rapid price decline has forced many aluminum producers around the world to shut operations that have been running below their cash costs.

On Tuesday, Kaiser Aluminum, which itself emerged from four years of Chapter 11 bankruptcy protection in 2006, posted a quarterly loss, which it attributed largely to declining production and one-time charges.

And last month, Alcoa Inc (AA.N) reported a fourth-quarter loss, its first in six years.

On a conference call with analysts, Hockema said the outlook for the first quarter was positive in the area of aerospace and heat-treated aluminum plate, which is used in aircraft manufacture.

But he saw weak demand through the quarter for the ground transportation sector, which includes auto manufacture.

Hockema said it was difficult to forecast demand trends, since inventories were high at end-users and at service centers -- the middlemen who purchase metal from producers and process it for customers.

Kaiser's net fourth-quarter loss -- announced late on Tuesday -- was $108 million, or $5.56 per share, compared with profit of $24.4 million, or $1.20 per share in the same quarter of 2007, the Foothills Ranch, California-based company said.

The results included special items amounting to $192 million, including charges for restructuring operations and losses on hedging. There was also a $38 million charge to write off Kaiser's 49 percent equity investment in a smelter in Anglesey, Wales, which will curtail production in September.

Revenue fell 9 percent to $327 million, amid a sharp decline in industrial production and lower demand of its products for automotive uses, but exceeded the Reuters Estimates average forecast by analysts of $310 million.

Kaiser Aluminum stock was down 2.1 percent at $23.40 in afternoon trading on the Nasdaq on Wednesday. (Reporting by Steve James; Editing by Tim Dobbyn)