Oct. 12, 2016

Alcoa's Profits Grow in Final Quarter Before Split

Alcoa reported third-quarter net income of $166 million, a 277.2 percent increase from the same period in 2015, and 22.9 percent better than the prior quarter. The New York-based aluminum maker’s net income of $317 million through three quarters was down 16.3 percent from last year.

Net sales in the quarter totaled $5.2 billion, 6.4 percent below the third quarter of 2015. For the full year, Alcoa’s net sales of $15.5 billion were down 10.0 percent from last year.

“Alcoa steered steady and showed resilience in spite of near-term market challenges,” said Klaus Kleinfeld, Alcoa chairman and CEO, during the company’s quarterly conference call with investors and analysts. “Profits grew in the combined Arconic segments, and Alcoa Corp. segments managed successfully to stay profitable in a low pricing environment.”

The period marked the final quarter for the combined Alcoa company before its separation into two entities in November. The upstream business will retain the Alcoa name, while the downstream operations will be renamed Arconic. The downstream business will include Global Rolled Products (other than the rolling mill operations in Warrick, Ind., and Saudi Arabia, which will move to Alcoa Corp.), Engineered Products and Solutions, and Transportation and Construction Solutions.

In third-quarter 2016, the Arconic segments reported combined revenue of $3.4 billion, down 1 percent from the same quarter in 2015. The decline reflects customer adjustments to delivery schedules in the aerospace industry and softness in North America commercial transportation, partially offset by strong North America automotive volume, company executives said.

“Arconic’s results underline its strong position in higher-margin markets where innovation, technology, process skills and cost focus pay off even under demanding circumstances, whereas Alcoa Corp. proved to be successful in spite of challenging market conditions. The strength of both future companies is the result of our multi-year strategy and allows us to launch two strong, independent entities,” said Kleinfeld, who will remain in charge of the downstream company after the November 1 split.

Among its end markets, Alcoa continued to forecast year-over-year increases of 4-6 percent in construction and 1-4 percent in automotive, 0-3 percent growth in aerospace and production declines in commercial transportation.


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Monday, October 23, 2017