Alcoa posts surprise profit after aluminum orders increase

April 10 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum producer, reported an unexpected first-quarter profit after customers from automakers to beverage-can manufacturers ordered more of the metal.

Net income fell to $94 million, or 9 cents a share, from $308 million, or 27 cents, a year earlier, the New York-based company said today in a statement. Earnings excluding restructuring costs and other items were 10 cents a share, compared with the 4-cent loss that was the average of 19 analysts’ estimates compiled by Bloomberg.

Sales increased to $6.01 billion from $5.96 billion. The average of 12 estimates was for $5.77 billion.

U.S. and Canadian aluminum producers’ shipments of extruded products, such as pipes and rods, rose 13 percent in the year March 20 from a year earlier, The Aluminum Association said in an April 9 report. Car and light-trucks construction increased 23 percent in the first quarter, according to Federal Reserve data.

“Demand in Europe and the U.S. is a little better than we expected,” Lloyd O’Carroll, an analyst at Richmond, Virginia- based Davenport & Co. who has a buy rating on Alcoa, said in a telephone interview before the earnings were released.

Alcoa rose 5.5 percent to $9.83 at 4:23 p.m. in New York after the close of regular trading.

Aluminum on the London Metal Exchange averaged $2,219 a metric ton in the first quarter, 12 percent less than a year earlier.

Output Cuts

Alcoa, traditionally the first company in the Dow Jones Industrial Average to report quarterly earnings, got about one- third of its revenue in 2011 from smelting aluminum. Its flat- rolled segment, which produces metal used in autos and aircraft wings, and engineered products unit, which makes items including bolts and fasteners and turbine blades, generated 53 percent of sales.

Chief Executive Officer Klaus Kleinfeld said in January he plans to move Alcoa to the 41st percentile on the aluminum industry’s so-called production cost curve by 2015, from 51st.

The company is building the world’s lowest-cost integrated aluminum complex in Saudi Arabia in partnership with Saudi Arabian Mining Co., the state-run producer also known as Maaden. The $11 billion complex will include a rolling mill and smelter, bauxite mine and refinery.

Alcoa said in January it would shut plants in Texas, Tennessee, Spain and Italy this year, eliminating 12 percent of its primary aluminum capacity, or 531,000 tons.

Norway’s Norsk Hydro ASA shut a 60,000-ton line at its Kurri-Kurri smelter in Australia and cut 180,000 tons at a German plant in January. Oleg Deripaska, the CEO and largest shareholder of Russia’s United Co. Rusal, said in December that falling metal prices may prompt smelters to shut down 3 million tons of capacity globally.

Bloomberg News



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