Alcoa reports loss as economy hits demand
NEW YORK (Reuters) - Aluminum producer Alcoa Inc, which is slashing 15,000 jobs, reported a fourth- quarter loss on Monday, as the global economic crisis sent revenue plummeting on lower demand and declining metal prices.
Although Wall Street was expecting the loss, Alcoa's first in six years, it was bigger than forecast, but revenue was $700 million higher than expected, and the company's stock was little changed after-hours.
Alcoa said the loss was a result of "an historic decline in metal prices," weak end markets and almost $1 billion in restructuring, impairment and other special charges to curtail production, reduce costs and streamline its portfolio. Last week, Alcoa announced the job losses and said it would halve capital spending and sell four businesses.
Alcoa said there was a 35 percent decline in aluminum prices in the quarter and a sharp drop in demand, particularly from the automotive, commercial transportation and building and construction sectors. The strike at Boeing Co, which uses aluminum for aircraft manufacture, had a negative $10 million impact on sequential results, Alcoa said.
"Considering they came in lower than even the lowest estimate, I can't see that that paints a good picture going forward," said Jonathan Pavlik, portfolio manager at Stewart Capital Advisors LLC in Indiana, Pennsylvania.
"It just points to conditions weakening even further from where they are already."
The net loss was $1.19 billion, or $1.49 per share, compared with earnings of $632 million, or 75 cents per share in the same quarter of 2007, the Pittsburgh-based company said.
The loss from continuing operations, which includes restructuring, impairment and other special charges of $920 million, or 88 cents per share, was $1.16 per share.
Revenue dropped to $5.7 billion from $7.0 billion, as the price of aluminum slumped. It has fallen some 50 percent since peaking at $3,380 per tonne last July and during the fourth quarter, aluminum dropped from $2,415 on October 1 and was around $1,520 on Monday.
Analysts on average were expecting a loss of 9 cents per share and revenue of $5.061 billion, according to Reuters Estimates. The 9 cent loss estimate compares with a loss of 28 cents excluding the 88 cents for restructuring, impairment and special charges.
President and Chief Executive Officer Klaus Kleinfeld said Alcoa had to take "wide-ranging measures to address the economic downturn."
Alcoa's share price, which was at a 52-week high of $44.76 last May, has plummeted since demand for aluminum fell in the global economic downturn. The shares hit a low of $6.82 on November 20, but have since rallied. On Monday, they closed down 6.94 percent at $10.06 on the New York Stock Exchange and were little changed in late trading.
Last week, Alcoa announced job and production cuts to counter the recession. It cut aluminum production by 18 percent, reduced the global work force by 13 percent and said it would sell four of its businesses.
(Editing by Andre Grenon)
