Alcoa Posts Higher Profit

(RTTNews) - Alcoa Inc. (AA), the largest U.S. aluminum producer, said Wednesday after the markets closed that its second quarter profit rose 1.4% from last year, as sales increased 1% due to organic growth in aerospace, automotive and alumina businesses.

However, the company's quarterly earnings per share, excluding items, came in below analysts' expectations, but its quarterly sales beat analysts' forecast.

"We continue to transform Alcoa; our portfolio reshaping combined with smart investments in growth markets is delivering strong results," said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer.

Alcoa also affirmed its 2015 global aluminum demand growth forecast of 6.5%.

Alcoa shares are currently gaining 0.57% in after hours trading after closing the day's regular trading session at $10.50, down 56 cents or 5.06%. The shares trade in a 52-week range of $10.39 to $17.75.

Alcoa was replaced by Nike, Inc. (NKE) on the Dow Jones Industrial Average Index in 2013. However, it is still among the first major U.S. companies to report earnings for a new season and is considered a bellwether.

Alcoa was among the companies that were hit most during the recession. The company cut more than 20,000 jobs and closed plants in the U.S. and Europe to tide over the global economic slowdown. Like other aluminum producers, the company had been suffering from declining aluminum prices caused by a glut. Alcoa has taken steps to cut costs and reallign production in order to remain competitive.

Alcoa last year acquired jet engine component maker Firth Rixson, which is on target to increase its revenues by $1.6 billion in 2016. In March, Alcoa completed the acquisition of privately held TITAL, a Germany-based manufacturer of titanium and aluminum structural castings for aircraft engines and airframes. Also in March, Alcoa agreed to buy titanium supplier RTI International Metals, Inc. (RTI) for an enterprise value of $1.5 billion to strengthen its aerospace business.

Additionally, Alcoa is doubling its jet engine coating technology capacity at its Whitehall, Michigan, U.S. facility.

Alcoa sold three European rolling mills and completed closure of Australian can sheet rolling mills during the fourth quarter. Alcoa also continued to reduce costs in its upstream businesses. The company sold stakes in upstream assets during the fourth quarter.

Alcoa permanently closed its 96,000 metric ton Poços de Caldas primary aluminum smelter in Brazil on June 30, reducing its total global smelting capacity to 3.4 million metric tons.

Alcoa's Alumina segment reported an after-tax operating income, or ATOI, of $215 million for the second quarter, up from $38 million a year earlier. Alumina production totaled 3,977 kmt in the second quarter, down from 4,077 kmt in the second quarter of last year.

The company's Primary Metal segment reported a second quarter ATOI of $67 million, down 31% from $97 million in the second quarter of 2014.

Second quarter ATOI for the company's Global Rolled Products segment rose 9% from last year to $76 million, driven by strong productivity gains, recording-setting about 200% growth in automotive sheet shipments, and increased commercial transportation and aerospace volume of 10 percent and 4 percent, respectively.

Quarterly ATOI from the company's Engineered Products and Solutions segment grew 4% year-over-year to $210 million.

For the second quarter ended June 30, 2015, the company reported net income of $140 million or $0.10 per share, compared to $138 million or $0.12 per share for the year-ago quarter.

Excluding special items, adjusted net income for the second quarter was $250 million or $0.19 per share, compared to $216 million or $0.18 per share in the prior year quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.23 per share for the second quarter. Analysts' estimates typically exclude special items.

Sales for the second quarter rose 1% to $5.90 billion from $5.84 billion in the same quarter last year. Eleven analysts had a consensus revenue estimate of $5.79 billion for the second quarter.