CHICAGO (Reuters) - Alcoa Inc on Monday reported a lower quarterly net profit, with falling aluminum and alumina prices pressuring revenue while plant operations have been scaled back ahead of a spinoff of its traditional smelting business later this year.
Alcoa reiterated its forecast for global automotive production growth in 2016 of 1 percent to 4 percent. It said continued weakness in the North American heavy-duty truck, trailer and bus market would offset anticipated growth in this market in China.
“We have become more flexible and we are continuing to perform well in a low pricing environment,” Alcoa Chief Executive Officer Klaus Kleinfeld told Reuters. “Once the pricing environment comes back, and it’s hard to determine when, you’ll see our performance going up.”
The New York-based company said second-quarter net income fell to $135 million or 9 cents per share from $140 million or 10 cents per share a year earlier.
Analysts had on average expected earnings per share of 9 cents.
The company said that excluding one-time items, it reported earnings per share of 15 cents.
In the second half of this year, Alcoa is due to split in two, spinning off smelting operations under the Alcoa name. Its value-added business, focused predominantly on the aerospace and automotive industries, will operate under the name Arconic.
The company, which sells titanium and aluminum parts to the aircraft industry, said it expects full-year 2016 global large commercial aircraft deliveries will be flat to up 3 percent, followed by strong double-digit growth in 2017.
Alcoa faces a challenging market as aluminum prices have hovered around historic lows. Many producers have accused China of selling metal below market rates into oversupplied global markets. China has denied this, saying excess capacity is a global issue.
As part of its restructuring plans, Alcoa has divested itself of 40 percent of its smelting capacity.
Alcoa said it expects a global alumina deficit for 2016 of 1.5 million metric tons.
The company reported revenue for the quarter of $5.3 billion, down 9 percent from $5.9 billion a year earlier. Analysts had expected revenue for the quarter of $5.2 billion.
Alcoa’s shares rose 3.2 percent on Monday ahead of the earnings report. In after-market trading, shares dipped 1 cent to $10.13.
(Adds executive comment, commercial aircraft forecast.)
Reporting By Nick Carey; Editing by David Gregorio
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