Forbes
Higher volumes, emerging market demand offset trend and help company top estimates.
Alcoa was the first Dow Jones industrial average component to report earnings Thursday, and the aluminum producer earnings beat expectations as higher volume helped offset lower prices and negative currency impacts.
The company earned 6 cents per share, including a net charge of 3 cents related to special items. Excluding the charge, Alcoa ( AA - news - people ) earned 9 cents per share to easily beat the consensus analyst estimate of 5 cents. Revenue of $5.3 billion, was better than the $5 billion expected.
Earnings were up 21% from a year ago, while revenue was 15% higher.
Aluminum prices on the London Metal Exchange dropped early this year, dipping below $1,900 per metric ton in May, but Alcoa is confident that trends in emerging markets will help increase demand for its products moving forward.
"In countries such as China, Brazil, India, and Russia, more and more people are moving into the middle class, driving demand in building and construction, transportation, and packaging. This trend favors aluminum as it is light, strong, and infinitely recyclable," said Alcoa CEO Klaus Kleinfeld.
Though softer aluminum pricing had a negative impact on third-quarter results, aluminum has rallied 20% since late August, to trade at $2,334 per ton Thursday. That bodes well for Alcoa's fourth quarter, when analysts expect the company to report earnings of 13 cents per share.
Alcoa, which has seen its stock gain 20% since the beginning of September, lost 17 cents, or 1.4%, to $12.20 Thursday, but gained 3.2% in after-hours trading once its earnings were released.
The company, which reduced its quarterly dividend to 3 cents per share, from 17 cents, in March 2009 as part of an effort to improve liquidity and its cost structure, reduced its debt by $491 million this quarter.
“We enhanced our liquidity, improved our balance sheet, and saw strong performance in our mid and downstream businesses,” said Kleinfeld.
Alcoa was the first Dow Jones industrial average component to report earnings Thursday, and the aluminum producer earnings beat expectations as higher volume helped offset lower prices and negative currency impacts.
The company earned 6 cents per share, including a net charge of 3 cents related to special items. Excluding the charge, Alcoa ( AA - news - people ) earned 9 cents per share to easily beat the consensus analyst estimate of 5 cents. Revenue of $5.3 billion, was better than the $5 billion expected.
Earnings were up 21% from a year ago, while revenue was 15% higher.
Aluminum prices on the London Metal Exchange dropped early this year, dipping below $1,900 per metric ton in May, but Alcoa is confident that trends in emerging markets will help increase demand for its products moving forward.
"In countries such as China, Brazil, India, and Russia, more and more people are moving into the middle class, driving demand in building and construction, transportation, and packaging. This trend favors aluminum as it is light, strong, and infinitely recyclable," said Alcoa CEO Klaus Kleinfeld.
Though softer aluminum pricing had a negative impact on third-quarter results, aluminum has rallied 20% since late August, to trade at $2,334 per ton Thursday. That bodes well for Alcoa's fourth quarter, when analysts expect the company to report earnings of 13 cents per share.
Alcoa, which has seen its stock gain 20% since the beginning of September, lost 17 cents, or 1.4%, to $12.20 Thursday, but gained 3.2% in after-hours trading once its earnings were released.
The company, which reduced its quarterly dividend to 3 cents per share, from 17 cents, in March 2009 as part of an effort to improve liquidity and its cost structure, reduced its debt by $491 million this quarter.
“We enhanced our liquidity, improved our balance sheet, and saw strong performance in our mid and downstream businesses,” said Kleinfeld.
