Alcoa profit hurt by slowing economic growth
By Steve James
(Reuters) - Alcoa Inc (AA.N: Quote), the largest U.S. aluminum producer, said slowing economic growth knocked prices for the metal lower, denting its third-quarter profit and sending its shares down in after-hours trading.
CEO Klaus Kleinfeld warned of weak economic conditions through the year, particularly in Europe, "as confidence in the global recovery faded."
That sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing.
The third-quarter profit jumped from a year ago, but was lower than the second quarter and fell short of Wall Street expectations, which had already been lowered because of a slump in global metal prices.
Chief Financial Officer Chuck McLane said worries about Europe's debt crisis had prompted customers there to reduce orders, but Kleinfeld said such fear was unfounded.
"We've seen strength in many of our markets, despite the sharp slowdown in Europe that hurt our sequential results and I'm more concerned about lack of confidence than about market fundamentals.
"It almost looks like the world is worrying itself into another recession and that should not be allowed to happen," he told Wall Street analysts on a conference call.
"I think the problems that we have today ... those fears, not a shrinking market, were the main reason for the weak quarter." Continued...