Tags: Alcoa | Ford | aluminum | earnings

Alcoa Earnings Beat Estimates After Aluminum Price Increases

Wednesday, 08 Oct 2014 04:38 PM

Alcoa Inc., the largest U.S. aluminum producer, reported third-quarter earnings that beat analysts’ estimates after metal prices rose amid higher aerospace and auto demand.

Net income rose to 12 cents a share from 2 cents, the New York-based company said today in a statement. Profit excluding one-time items was 31 cents, surpassing the 22-cent average of 17 estimates compiled by Bloomberg. Sales increased to $6.24 billion, beating the $5.84 billion average.

Aluminum use now exceeds production outside China, the company said in July. The supply-demand balance has changed partly because of smelting cuts. Also helping are higher commercial-jet orders and a shift to aluminum components instead of steel among automakers such as Ford Motor Co., which plans to make its F-150 pickup truck with aluminum body panels.

“Demand is rising and it will accelerate next year, pretty heavily, because of the F-150,” Lloyd O’Carroll, a Richmond, Virginia-based analyst at Northcoast Research Holdings LLC who recommends buying Alcoa shares, said in an interview before the results.

Alcoa Chairman and Chief Executive Officer Klaus Kleinfeld has closed some of the company’s least efficient aluminum smelters while increasingly focusing on its segments that process the metal.

Alcoa has expanded capacity at downstream plants in Indiana and Virginia this year, and in June agreed to buy U.K. aerospace-component maker Firth Rixson Ltd. for $2.85 billion, its biggest acquisition since 1999.

The company has permanently shut 565,000 metric tons of aluminum smelting capacity since 2011 while a further 803,000 tons is being kept idle.

Despite a lingering global surplus, prices have rallied this year. Metal for delivery in three months, the benchmark contract on the London Metal Exchange, averaged $2,009 a ton in the third quarter, up 9.9 percent from a year earlier. The premium that buyers pay to have metal delivered from warehouses has soared, something that also benefits Alcoa.

 

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Alcoa, the largest U.S. aluminum producer, reported third-quarter earnings that beat analysts' estimates after metal prices rose amid higher aerospace and auto demand.
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2014-38-08
Wednesday, 08 Oct 2014 04:38 PM
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