July 20, 2016

Alcoa Reports Profitable Quarter

Alcoa, the New York-based aluminum giant, reported net income of $135 million in the company’s second quarter, a modest decline from the $140 million in 2015, but up significantly from the $16 million in the prior quarter. For the first half, the company’s income of $151 million was down more than 50 percent compared with the prior year.

Alcoa’s net sales totaled $5.3 billion in the quarter, a 10.2 percent decline from second-quarter 2015, but an improvement of 7.0 percent from the previous quarter. For the year to date, net sales of $10.2 billion were down 12.6 percent from 2015.

"As markets ever more rapidly evolve, we have made Alcoa increasingly agile,” said Klaus Kleinfeld, Alcoa chairman and CEO during the company’s quarterly conference call with investors and analysts. “In the face of a transforming aerospace market, we moved quickly to bring our costs down while capturing new opportunities. And our automotive sheet revenue hit an all-time high.”

In the global aerospace market, 2016 continues to be a transition year for original equipment manufacturers, executives said. Within jet engines, new launches are accelerating demand, outpacing near-term demand for structural airframe components, which is being partially absorbed through de-stocking. Large commercial aircraft deliveries declined approximately 1 percent year-over-year in the first half of 2016, but are expected to rise 6 percent in the second half.

In automotive, Alcoa continues to forecast global production growth of 1 to 4 percent. This includes 1 to 4 percent growth in North America, where the United States continues to record strong sales, particularly in the light truck segment.

Alcoa also projects solid growth in other end markets. Low natural gas prices in North America and the adoption of new, high-efficiency industrial gas turbine models continue to drive orders for both heavy-duty gas turbines and spare parts. Growth in the heavy-duty truck, trailer and bus market in Europe and China is expected to be offset by continued production declines in North America. Overall, Alcoa forecasts a decline of 1 to 4 percent in the global commercial transportation market.

The company’s separation into upstream and downstream business units remains on target for the second half. Following the separation, Alcoa will be comprised by Bauxite, Alumina, Aluminum, Cast Products, and Energy, plus rolling mill operations in Warrick, Ind., and Saudi Arabia that are currently part of the Global Rolled Products segment. The Value-Add segments of the business will be part of the existing company, to be renamed Arconic.


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Monday, October 23, 2017