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CHICAGO – Alcoa on Monday reported a lower quarterly net profit, as revenue was hit by falling aluminium and alumina prices and plant operations that have been curtailed, closed or sold off.
Alcoa reiterated its forecast for global automotive production growth in 2016 of 1% to 4%, but said continued weakness in the North American market would offset anticipated growth in heavy-duty truck, trailer and bus production in China.
"We are continuing to perform well in a low pricing environment," Alcoa CEO Klaus Kleinfeld told Reuters. "Once the pricing environment comes back, and it's hard to determine when, you'll see our performance going up."
The New York-based company reported second-quarter net income of $135-million or $0.09 a share, down from $140-million or $0.10 a share a year earlier.
Analysts had on average expected earnings per share of $0.09 a share.
The company said that, excluding one-time items, it reported earnings per share of 15c.
Alcoa is due to split in two in the second half of this year. It will spin off its traditional smelting operations under the Alcoa name while its value-added business, focused predominantly on the aerospace and automotive industries, will operate under the name Arconic.
The company said it expects global large commercial aircraft deliveries to increase 6% in the second half of 2016 from the first six months.
Alcoa faces a challenging market as aluminium prices have hovered around historic lows. Many producers have accused China of selling metal below market rates into oversupplied global markets. China has denied this, saying excess capacity is a global issue.
As part of its plans to restructure its traditional aluminium and alumina business, Alcoa has curtailed, shuttered or sold off 40% of its smelting capacity.
Alcoa said it expects a global alumina deficit for 2016 of 1.5-million metric tons.
The company reported revenue for the quarter of $5.3-billion, down 9% from $5.9-billion a year earlier. Analysts had expected revenue for the quarter of $5.2-billion.
Alcoa's shares rose 3.2% on Monday ahead of the earnings report. In after-market trading, the company's shares were down $0.01 at $10.13.