Alcoa Profit Tops Estimates; Revenue Down On Weak Prices

(RTTNews) - Aluminum producer Alcoa (AA) said Tuesday it returned to a profit for the third quarter, led mostly by gains at its engineered products and alumina segments, amid increased demand from automakers and lower costs.

Alcoa's revenues for the quarter declined from a year ago, due mainly to weak metal prices, but nonetheless topped expectations. For 2013, Alcoa continues to expect global aluminum demand growth of 7 percent.

Shares of Alcoa gained 2.6 percent in after-hours trading on the New York Stock Exchange.

The largest U.S. aluminum producer, Alcoa was among the companies hit badly during the recession and has been plagued by weak prices for aluminum. The company resorted to huge job cuts and closed plants in the U.S. and Europe to battle the crisis.

Alcoa had announced the review of 460,000 metric tons of smelting capacity, equal to 11 percent of its global smelting capacity, for possible curtailment, while being positive on its investments in China.

During the quarter, Alcoa's Alumina segment reported an after-tax operating income - or ATOI - of $67 million, from a negative $9 million last year. Alumina production totaled 4,214 kmt, compared with 4,161 million kmt a year ago.

ATOI from the Engineered Products and Solutions segment climbed 22 percent to $192 million from last year. Primary Metal segment's ATOI was $8 million, from a negative $14 million last year. ATOI for its Global Rolled Products segment was lower by $18 million at $71 million.

As a whole, Alcoa posted third quarter net income of $24 million or $0.02 per share, compared with a net loss of $143 million or $0.13 per share last year.

Results for the quarter included $109 million of after-tax restructuring charges to improve upstream competitiveness, while the prior-year quarter recorded special items of $147 million.

Excluding items, adjusted earnings for the third quarter were $120 million or $0.11 per share, compared with adjusted earnings $32 million or $0.03 per share a year ago.

On average, 17 analysts polled by Thomson Reuters estimated earnings of $0.06 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter were lower at $5.77 billion, compared with $5.83 billion in the prior year, due mainly to a 7 percent drop in the London Metal Exchange price of aluminum.

Ten analysts had a consensus revenue estimate of $5.63 billion for the quarter.

Alcoa recently was replaced by Nike on the Dow Jones Industrial Average Index. Alcoa until then was the first among the Dow components to usher in the earnings season. On Monday, Morgan Stanley downgraded Alcoa to equal weight from overweight due to weak aluminum price expectations.

Alcoa stock closed Tuesday's regular trade at $7.93, down $0.04 or 0.47%, on a volume of 31 million shares. In after hours, the stock gained $0.21 or 2.62%, to trade at $8.14. In the past year, the stock trended in a range of $7.63 - $9.37.