January 10, 2011 / 9:31 PM / 7 years ago

Instant view: Alcoa Q4 profit tops Wall Street

4 Min Read

NEW YORK (Reuters) - Alcoa Inc, the largest U.S. aluminum producer, posted a fourth-quarter profit that topped Wall Street forecasts as aluminum prices and demand rose after two years of weakness.

Revenue rose 4 percent to $5.7 billion, helped by the 5 percent increase in prices for the metal during the fourth quarter.

Following are initial reactions of analysts and investors:

Bridget Freas, Analyst at Morningstar in Chicago:

"The numbers came in a little bit higher than consensus. It's not terribly surprising. They've done a good job at improving margins and have cut overhead. Of course the better aluminum pricing was what drove the higher-than-expected earnings.

"I think it's a good sign that they expect global growth up 12 percent this year. It's optimistic, but reasonable."

"If this is sustainable, this is certainly going to be good year for Alcoa.

Tony Robson, Bmo Capital Markets-Canada, Toronto:

"At 20 cents (EPS), even though it's a few pennies difference from the Street's consensus, I think the markets will be happy that Alcoa did manage to beat."

ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES

Inc.,Toledo, Ohio:

"It looks like it's above expectations, and I think that's exactly what the market is going to need to continue its momentum. You have to beat consensus expectations, and you have to guide higher as far as subsequent quarters. It looks like that might be the case ... it's a good first shot across the bow for the earnings season.

"You can't really go by Alcoa (for the rest of the earnings season) ... it will be interesting to see if we get more of that."

MARC PADO, MARKET STRATEGIST, CANTOR FITZGERALD & CO, SAN

Francisco

"Really, the comment about demand going forward, that they see a 12 percent increase in demand for aluminum, that's much higher than what was expected. Because it's an industrial material, the question arises then whether the economy is going to be picking up the pace for this kind of increase in demand. And it bodes well for the economic outlook overall, that was the key component in the statement that came with the earnings."

"It's a relief. There's always, going into the first week of earnings, some concern, what if I'm wrong? Getting that first big number out of the way and seeing it beat expectations is somewhat of a relief. It bodes well. It's a raw material, it is a lead indicator for the market and that's one of the reasons why people pay so much attention to an old company like Alcoa."

John Tumazos, President of Veryindependent Research in

Holmdel, New Jersey

"What really knocked my socks off was when they said they're projecting 12 percent demand growth for 2011. I don't think there's enough aluminum in the world..."

"In order to get a 12 percent growth rate in 2011, the world auto industry would have to be very strong, and each region of the world would have to be very strong. China would have to have enough electricity to make aluminum and use aluminum, and construction would need to recover in various regions: stay strong in China, and rebound in the U.S."

"The (beverage) cans are never going to grow that much, unless somebody starts drinking really hard somewhere in the world."

Reporting by Anna Driver in Houston, Braden Reddall in San Francisco and Ernest Scheyder, Caroline Valetkevitch and Alina Selyukh in New York

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