Alcoa posts quarterly profit; sees aluminum demand growth
TORONTO (Reuters) - Alcoa Inc (AA.N: Quote) remains optimistic that global demand for aluminum will grow 7 percent this year, driven largely by demand from the aerospace and commercial transportation sectors, the largest aluminum producer in the United States said on Monday.
The company also reported a larger-than-expected profit on productivity gains across all units, and strong performance from its engineered products and solutions business, which makes high-margin goods like aerospace fasteners, turbine blades and truck wheels.
Excluding the impact of restructuring costs and costs tied to a legacy legal matter, Alcoa reported second quarter earnings of $76 million, or 7 cents a share. Analysts had been expecting earnings of 6 cents, according to Thomson Reuters I/B/E/S.
"It looks much better than expected. It is good to see that revenue is better than expected," said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm based in Toledo, Ohio. "It seems like the outlook is favorable so far."
Quarterly revenue fell 2 percent to $5.85 billion, largely because of lower aluminum prices, but revenue topped analysts' expectations of $5.83 billion.
The London three-month aluminum price fell nearly 7 percent during the quarter ended June 30 and has tumbled around 13 percent in 2013. Aluminum touched a nearly four-year low late last month of $1,758 a tonne.
Stubbornly low aluminum prices caused by a global surplus and concerns about lackluster demand have weighed on Alcoa's business of mining bauxite, refining it into alumina and then smelting alumina to produce aluminum. Alcoa and many of its rivals have responded with production cuts and shutdowns.
Alcoa is no longer the bellwether it once was, due to the plight of the aluminum industry and the price of the metal, but its quarterly results are still closely followed, as they mark the unofficial start of the earnings season in North America.
Alcoa has enjoyed a tenure of more than 50 years as a component of the Dow Jones Industrial Average, but it is now by far the smallest company in the index. Its stock price has fallen more than 10 percent over the last 12 months, while the Dow itself has risen roughly 18 percent, over the same period. Continued...