Alcoa Posts Loss On Charges

(RTTNews) - Alcoa, Inc. (AA), the largest U.S. aluminum producer, said Tuesday after the markets closed that it swung to a first quarter loss, hurt by lower sales and charges tied mainly to capacity reductions.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly sales fell short of analysts' forecast.

"We hit record downstream profitability, nearly tripled results in the midstream, and strengthened our upstream business for the 10th quarter in a row," said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer.

Alcoa reiterated its forecast of global aluminum demand growth of 7% for 2014.

Alcoa shares are currently gaining 2.23% in after hours trading after closing the day's regular trading session at $12.53, up 6 cents. The shares trade in a 52-week range of $7.63 to $13.18.

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 is currently suffering from declining aluminum prices cuased by a glut. Alcoa has taken steps to cut costs and reallign production in order to remain competitive. The company has completed its planned closure or curtailment of 531,000 metric tons, or 12%, of its highest-cost system smelting capacity.

Alcoa has further announced the review of 460,000 metric tons of smelting capacity, equal to 11% of its global smelting capacity, for possible curtailment due to low metal prices and to maintain cost competitiveness.

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

Alcoa's Alumina segment reported an after-tax operating income, or ATOI, of $92 million for the first quarter, a jump of 59% from a year earlier. Alumina production totaled 4,172 kmt in the first quarter, up from 3,994 kmt in the first quarter of last year.

The company's Primary Metal segment reported a first quarter after-tax operating loss of $15 million, compared to after-tax operating income of $39 million last year.

First quarter ATOI for the company's Global Rolled Products segment fell 27% year-over-year to $59 million.

First quarter ATOI from the company's Engineered Products and Solutions segment rose 9% to $189 million from $173 million in the year-ago quarter.

For the first quarter ended March 31, 2014, the company reported a net loss of $178 million or $0.16 per share, compared to net income of $149 million or $0.13 per share for the year-ago quarter.

The latest quarter results include $276 million in special items largely tied to smelter and rolling mill capacity reductions.

Excluding special items, adjusted net income for the first quarter was $98 million or $0.09 per share, compared to $121 million or $0.11 per share in the prior year quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.05 per share for the first quarter. Analysts' estimates typically exclude special items.

Net sales for the first quarter fell 6.5% to $5.45 billion from $5.83 billion in the same quarter last year, due to capacity reductions and lower aluminum prices. Eleven analysts had a consensus revenue estimate of $5.55 billion for the first quarter.