* Adjusted Q4 EPS $0.06 v street view of $0.06
* Revenue down 1.5 percent at $5.89 billion
* Shares up 1.3 percent at $9.22 in aftermarket trade
By Julie Gordon and Ernest Scheyder
Jan 8 Alcoa Inc, the largest aluminum
producer in the United States, is cautiously optimistic demand
for the metal will continue to grow in 2013, helped in part by
strong sales to aerospace and construction customers.
Executives offered a positive outlook on Tuesday for 2013,
but kept a cautious tone as worries lingered over a looming U.S.
Alcoa expects global aluminum consumption to grow 7 percent
in 2013, up slightly from 6 percent in 2012, and maintains
global aluminum demand will double between 2010 and 2020.
It forecast global consumption growth in the aerospace
sector to dip to 9 percent-10 percent in 2013 from 13 percent-14
percent in 2012, and pegged growth in the automotive sector at 1
percent-4 percent, well below 16 percent-17 percent in 2012.
"There is one uncertainty still there, which is the
uncertainty around the U.S. budget, and that potentially has an
impact, obviously, on the defense spend," Chief Executive Klaus
Kleinfeld said on a conference call with investors.
The company posted a fourth-quarter profit on Tuesday, in
line with Wall Street expectations, and handily beat
expectations on revenue, helping calm investors' nerves after a
Shares of Alcoa rose 1.3 percent in after-hours trading.
Analysts breathed a sigh of relief from the results of the
first S&P 500 company to report fourth-quarter results, hoping
it was a sign of things to come.
"I think it was a good solid quarter. Not a barnburner but a
good quarter," said Tim Ghriskey, chief investment officer at
Solaris Asset Management in Bedford Hills. "It's certainly
important in this type of environment to look at revenues."
Investors tend to scrutinize Alcoa's results for hints on
where the overall economy is headed, as the company's aluminum
products are used in the automotive, appliance and airline
Alcoa has pushed hard over the last four years to increase
productivity and cut overhead costs in an effort to ease the
impact of stubbornly low aluminum prices. The company is eyeing
$750 million in productivity gains in 2013, down from $1.3
billion in 2012.
PROFIT IN LINE
The earnings were a positive turn for Alcoa, whose core
business of mining bauxite and producing aluminum has been hit
in recent years by a persistently low metal price.
The company's realized price for aluminum fell roughly 11
percent in 2012.
"It's difficult to make money with aluminum prices at these
levels, but consumption is holding up well," said Bridget Freas,
an analyst with Morningstar Inc in Chicago. "Aluminum prices
averaged $2,000 a ton in the fourth quarter and they need higher
prices for consistent profitability."
Economic sentiment, rather than market fundamentals, will
drive a rebound in aluminum prices, said Kleinfeld, noting a
recovery in Chinese growth and a U.S. budget deal would likely
have a positive impact on prices.
"The LME price these days is very much trading on general
economics," he said. "When people started to gain confidence
again that the fiscal cliff would be avoided, you actually saw
the rebound in the metal. That's what driving it these days."
For the fourth quarter, the company reported net income of
$242 million, or 21 cents per share, compared with a net loss of
$191 million, or 18 cents per share, in the year-ago period.
The quarterly results were helped by a $161 million
after-tax gain from the sale of the Tapoco Hydroelectric Project
facility in Tennessee to Brookfield Renewable Energy Partners
Excluding that and other one-time items, net income was $64
million, or 6 cents per share, in line with average analysts'
expectations of 6 cents a share on revenue of $5.6 billion,
according to Thomson Reuters I/B/E/S.
Sales were $5.89 billion, beating analysts' expectations,
but down 1.5 percent from the year-ago quarter as the average
realized price per tonne of aluminum fell slightly.
Alcoa trimmed costs by 12 percent in the fourth quarter, due
in part to fewer restructuring expenses.
Separately, Chief Financial Officer Charles McLane, 58, said
he would retire from Alcoa in August after 13 years with the
company. He will be replaced by William Oplinger, currently
Alcoa's chief operating officer.
Alcoa said it has yet to reach an agreement with U.S.
officials over charges it arranged bribes to overcharge Aluminum
Bahrain (Alba) alumina, the crucial material used to
Alcoa settled with Alba last fall, but the U.S. Department
of Justice and the Securities and Exchange Commission opened
their own investigations.
Alcoa said it's not clear if it will be able to reach an
agreement with U.S. officials and is prepared to go to trial.
Any settlement or verdict could significantly harm earnings, the