Photo by: Bloomberg
TORONTO (miningweekly.com) – US aluminium and lightweight alloys specialist Alcoa on Monday beat Wall Street analyst expectations when it reported a higher-than-expected adjusted profit for the December quarter, following its strategic transition over the past year to forego primary aluminium production in favour of the more lucrative specialty automotive and aerospace products industries.
For the three months ended December 31, New York-based Alcoa reported a net profit of $159-million, or $0.11 a share, compared with a loss of $2.3-billion, or $2.19, a year earlier.
Excluding special items, which mainly comprised restructuring costs, the manufacturer’s net profit was $432-million, or $0.04 a share, significantly up from $40-million, or $0.04 a share, in the corresponding quarter of 2013.
Wall Street analysts had on average expected adjusted earnings a share for the quarter of $0.25 a share.
Fourth-quarter revenue was $6.4-billion, up 14% year-on-year from $5.6-billion, as improved sales in Alcoa’s value-add businesses, comprising the mid and downstream, favourable metal prices and energy sales drove the company’s year-over-year revenue increase.
The company’s engineered products and solutions division reported its nineteenth consecutive quarter of year-over-year after-tax operating income growth, excluding newly acquired Firth Rixson. The global rolled products business continued to benefit from what Alcoa called a “historic” shift to aluminium intensive vehicles and shipped a record volume of automotive sheet.
In the global primary products segment, comprising alumina and primary metals, the alumina segment’s profitability more than doubled year-over-year, while the primary metals segment reported that adjusted earnings before interest, taxes, depreciation and amortisation for every metric ton was the strongest since the second quarter of 2008, mainly reflecting a lower cost, globally competitive commodity business.
During the year, Alcoa sold three European rolling mills, completed the closure of Australian can sheet rolling mills and sold stakes in upstream assets in Jamalco, Jamaica, and Mt Holly, South Carolina.
2015 OUTLOOK
Alcoa expected global aerospace sales to rise by 9% to 10% in 2015 on robust demand for large commercial aircraft, regional jets and jet engines.
The company expected global automotive output to rise by 2% to 4%, driven by replacement demand and low lending rates in North America and both the growth of the middle class and clean air regulations in China.
Alcoa expected commercial transportation production of -1% to 3%, noting that after a strong 2014, the trucking market in North America was expected to remain positive this year with output growth of 3% to 7% on strong orders and freight growth. In the packaging market, Alcoa projected global sales growth of 2% to 3% in 2015.
Alcoa expects the building and construction market to continue to improve from 2014 with 2015 global sales growth of 5% to 7%. The North American market was expected to sustain its gradual recovery in 2015, while the European market was likely to remain in decline.
In the industrial gas turbine market, Alcoa expected a 1% to 3% growth rate this year, rebounding from a decline in 2014. The airfoil market was expected to improve as original-equipment manufacturers developed new, advanced turbines and upgraded existing turbines.
Alcoa expected global aluminium demand growth of 7% in 2015, following the 7% growth in 2014.
Alcoa’s NYSE-listed stock on Monday edged higher, with after-market trading pushing the stock up 1.24% to $16.37 apiece.