Photo by: Bloomberg
TORONTO (miningweekly.com) – The NYSE-listed stock of US upstream and downstream aluminium products manufacturer Alcoa on Wednesday rose by more than 2% after market close, spurred by the company’s third-quarter earnings beating Wall Street analyst expectations.
The lightweight metals company unofficially kicked off the earnings season, reporting profit of $149-million, or $0.12 a share, for the three months ended September 30, compared with the $24-million in profit, or $0.02 a share, during the comparable quarter last year.
Excluding one-time items such as restructuring costs, adjusted earnings soared $370-million, or $0.31 a share, up from $120-million, or $0.11 a share.
Pittsburgh-based Alcoa’s revenue rose 8% to $6.24-billion, which topped Wall Street’s consensus estimate of $5.85-billion and forecast adjusted profit of $0.23 a share.
Alcoa’s quarterly performance was often viewed as a bellwether of the US economy. In the third quarter, it was supported by higher aluminium prices and its strategic shift into speciality alloys and specialist downstream manufacturing in the aerospace and automobile industries.
In June, Alcoa agreed to buy Firth Rixson, a jet engine parts manufacturer, for $2.85-billion. The company had also invested heavily this year in structural expansion of its manufacturing capacity.
“This quarter is a clear data point that Alcoa’s transformation is delivering. This strong quarter is the direct result of our intense focus on repositioning our portfolio and we're just hitting our stride,” chairperson and CEO Klaus Kleinfeld told investors during a conference call.
Alcoa expected global aerospace sales growth of 8% to 9%, driven by robust demand for large commercial aircraft and regional jets. The company also tightened its estimate for automotive production growth to between 2% and 4%, up from a low-end of 1%.
Alcoa also hiked its outlook for North American commercial transportation for the second time this year, saying it expected the market to expand by 16% to 20% this year compared with a previous range of 10% to 14%, which was based on a 43% rise in truck orders.
The company reaffirmed its expectation that global aluminium demand would expand by 7% this year. Alcoa saw a global aluminium deficit of 671 000 metric tons in 2014 and a further tightening of the alumina market, with a surplus declining to 389 000 t from 824 000 t in second quarter 2014.
The company's primary metals segment recorded operating income of $245-million in the quarter, up from $8-million year-on-year. The average realised aluminium price pitched 16% year-over-year and 11% from the previous quarter.
The engineered products division’s operating profit rose to $209-million, up 9% from last year, while the global rolled products division saw its operating profit climb 45% to $107-million. Alcoa noted that production would continue to ramp up to meet growing demand from automobile manufacturers.
The company’s Davenport, Iowa facility continued to ramp up production and was supplying vehicle manufacturer Ford with high-strength automotive sheet made with a military-grade aluminium alloy for the new F-150. The auto expansion at Alcoa, Tennessee was on schedule to open in mid-2015.
Alcoa's stock rose 2.36% in after-market trading to $16.45 on Wednesday, having gained more than 51% since the start of the year.