Oct. 14, 2015

Alcoa Profitable in Third Quarter Despite Headwinds

Alcoa reported net income of $44 million during the company’s third quarter, a decline from the $149 million in the same quarter of 2014. Excluding special items, net income for the New York-based lightweight metals company was $109 million.

The successful quarter was driven by productivity gains and solid midstream and downstream profitability, offset by lower metal prices, executives said. The Midwest transaction price for aluminum was down 27 percent from the start of the year.

Alcoa’s third-quarter 2015 revenue totaled $5.6 billion, down 11 percent year over year. Divesting and closing lower-margin businesses and market headwinds caused third-quarter revenue to decline by 21 percent. This decrease was partially offset by a 10 percent third-quarter revenue increase from organic growth in aerospace, automotive and alumina, combined with acquisitions, the company said.

“The third quarter brought economic headwinds and significant volatility in some of our markets,” Klaus Kleinfeld, chairman and CEO, told investors and analysts during the company’s quarterly conference call. “We have successfully made our upstream businesses less vulnerable to commodity downswings. We have intensified innovation and growth in the value-add businesses, and it shows through the solid underlying performance despite currency movements and market fluctuations.”

Income in the company’s Global Rolled Products segment totaled $62 million during the quarter, down $7 million from the same period in 2014. Strong productivity and the benefit of 133 percent automotive sales growth were more than offset by cost increases, investments in growth projects and an unfavorable price/mix.

In its global end markets, Alcoa forecasts global aerospace sales growth of 8-9 percent, and 3-4 percent for industrial gas turbines. In North America, it estimates 2-4 percent growth in automotive, 9-10 percent growth in heavy duty truck and trailer, 4-5 percent growth for commercial building and construction, and 1-2 percent for packaging.

Late in the quarter, Alcoa announced plans to create two independent companies, encompassing their upstream and downstream businesses. The upstream business, which will retain the company name, will comprise the business units that make up Global Primary Products—Bauxite, Alumina, Aluminum, Casting and Energy. The unnamed downstream business will include Global Rolled Products, Engineered Products and Solutions, and the Transportation and Construction Solutions segments.


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Tuesday, October 24, 2017