Alcoa posts 3Q profit, results miss Street expectations and stock slips

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Falling aluminum prices dragged down profit and revenue at Alcoa Inc., contributing to third-quarter results that fell short of Wall Street expectations.

The company's shares fell in after-hours trading.

Aluminum prices have been sliding on sluggish global growth, particularly in China. Alcoa was paid 25 percent less per ton than it received a year earlier.

Alcoa has been reducing its vulnerability to low commodity prices by closing smelters and cutting costs in its mining and refining business. It is also focusing more on making metal products for aviation and automobiles, where demand remains strong.

Last month, the century-old New York company announced that it will split into two businesses, a move that could let the products part of the company shake off the drag of the aluminum-producing segment.

Alcoa said Thursday that it earned $44 million in the third quarter, down from $149 million in the same period last year. Excluding restructuring costs and other items, Alcoa said adjusted earnings were 7 cents per share. The average estimate of five analysts surveyed by Zacks Investment Research was 14 cents per share; 12 analysts surveyed by FactSet looked for 13 cents per share.

Revenue fell 11 percent to $5.57 billion. The Zacks survey predicted $5.67 billion and FactSet $5.66 billion.

CEO Klaus Kleinfeld said the results, while down from a year ago, were encouraging given the volatile global economy, concern about the economy in China and developing countries, and weak aluminum prices. He said cost-cutting had allowed Alcoa's business of making alumina, which is used in aluminum, to post its best nine-month results since 2007, including a $212 million operating profit in the third quarter.

But lower aluminum prices pushed the smelting business to a $59 million loss compared with a $245 million profit a year earlier.

Alcoa's rolled-products and engineered-products units, which make parts for planes and cars, were profitable but slightly less so than in the same period last year.

The company has announced recent contracts to supply plane manufacturers Airbus and Lockheed with parts made from high-tech materials such as titanium. Kleinfeld said those contracts would have been beyond Alcoa's reach without recent acquisitions.

"Currencies I can't control, commodity prices I can't control," he said in an interview. "What I can control is what cost position do we have (in production) ... we have made the company stronger."

The shares ended regular trading at $11.01, up 7 cents for the session but down 30 percent for the year, compared with a 2 percent decline in the Standard & Poor's 500 index.

In late trading after the financial results, Alcoa shares were down another 56 cents, or 5.1 percent, to $10.45.

Elements of this story were generated by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on AA at

Keywords: Alcoa, Earnings Report

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