* Q1 EPS $0.13 vs $0.09 year earlier
* Revenue slips 3 pct to $5.83 bln vs consensus $5.88 bln
* Maintains forecast for global aluminum demand but sees
By Allison Martell
April 8 Alcoa Inc, the largest U.S.
aluminum producer, reported a higher quarterly profit on Monday
thanks in part to strength at its raw materials segment, but
lower-than-expected revenue and an uncertain outlook dragged
down the company's share price.
Stubbornly low aluminum prices have weighed on the company's
business of mining bauxite, refining it into alumina and
smelting alumina to produce aluminum.
"Most analysts when they update their spreadsheets probably
will reduce their 2013 estimates (for Alcoa) because the metal
price plunged so much in the last several weeks," said John
Tumazos, an analyst at Very Independent Reseach.com.
Alcoa, the first of the S&P 500 companies to report
first-quarter results, is viewed as a bellwether for the
materials sector, and some look to it as a gauge of the health
of the broader economy.
The company maintained its forecast of 7 percent growth in
global aluminum demand this year, and said it sees a tighter
market, with supply falling.
Recent growth at Alcoa has come from its engineered products
segment, which makes wheels, aircraft parts and other goods. In
the just-ended quarter, after-tax operating income also rose in
the hard-hit alumina and aluminum segments, where Alcoa has cut
Since the start of March, the three-month aluminum price
has hovered under $2,000 a tonne - a level close to the
cost of production at many smelters - due to sluggish global
demand and plentiful supplies.
"Aluminum prices are now down around $1,900 a ton," said
Bridget Freas, an analyst at Morningstar in Chicago. "It's very
difficult for the company to make any meaningful improvement in
their earnings around that level."
The lingering price slump has led to speculation that Alcoa
could offload some raw material assets. In an interview with
cable channel CNBC after the results, Chief Executive Klaus
Kleinfeld declined to rule that out: "This is not the time to
speculate," he said.
Operating income slipped in the rolled products segment,
which produces sheet and plate metal, hurt in part by weaker
sales in industrial and commercial transportation markets.
On a call with analysts and investors, Chief Financial
Officer William Oplinger said Alcoa expects strong demand for
rolled products from aerospace and automotive in the current
quarter, but continued pressure on prices in North America and
China. Prices have been hurt by excess inventory, he said.
In the current quarter, Oplinger said, earnings are expected
to rise 5 percent in engineered products, 15 to 20 percent in
rolled products, and alumina and aluminum combined should be
flat, all when compared with the first quarter.
Net income rose to $149 million, or 13 cents a share, from
$94 million, or 9 cents, a year earlier.
"It's very nice that they came in at 13 cents, but the ingot
and alumina divisions are going to have a much tougher time in
the June and September quarters," said Tumazos, the analyst at
Very Independent Reseach.com.
Excluding restructuring charges and other items, Alcoa
earned to $121 million, or 11 cents a share, compared with $105
million, or 10 cents, a year earlier. Analysts, on average, had
been expecting 8 cents a share, according to Thomson Reuters
Revenue slipped 3 percent to $5.83 billion, shy of the $5.88
billion expected, on average, by analysts, according to Thomson
Alcoa shares slipped 1 percent to $8.27 in post-market
trading, after closing at $8.39.