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By Nick Carey
Oct 11 Metals company Alcoa Inc on
Tuesday reported higher quarterly profit due to cost-cutting and
lower tax provisions, but the results missed expectations and
its stock sank nearly 10 percent.
The rise in profit at Alcoa came despite lower revenue as it
curtailed or closed some traditional smelting operations and
confronted falling prices. Revenues fell in its so-called
value-added business serving the automotive and aerospace
industries, which Alcoa said was due partly to delayed aircraft
deliveries and pricing pressure.
"We are performing well despite the low pricing environment
... demanding conditions on the commodity side as well as aero
industry teething problems," Alcoa Chief Executive Officer Klaus
Kleinfeld told Reuters. "What you see shining through is that we
have concentrated on what we can influence and you see our
This is the company's last quarterly report before it splits
into two separate entities ahead of the market opening on Nov.
1. The first, which will retain the name Alcoa, will focus on
traditional smelting business. The other, to be called Arconic,
will specialize in higher-end aluminum and titanium alloys for
the automotive, aerospace and construction industries.
Alcoa reiterated its forecast that global automotive
production will rise between 1 percent and 4 percent in 2016 and
that aircraft deliveries will be flat to up 3 percent in 2016.
Its quarterly results came as benchmark aluminum prices
hit two-month highs on Tuesday before retreating due to
concerns over oversupply and rising output by top producer
But Kleinfeld said capacity growth in China "has not been
substantial," adding that Alcoa sees aluminum demand increasing
5 percent in 2016, outpacing supply growth of 3 percent.
He said the continued "aluminumization" of the auto industry
as manufacturers include strong, lightweight alloys into their
product lineups, "although the overall market in the U.S. seems
to be plateauing."
Earlier Tuesday the top executive at Novelis Inc,
the world's largest maker of rolled aluminum products, told
Reuters that demand for the metal should grow 4 percent to 5
percent in 2017, boosted by sales to automakers and can
New York-based Alcoa reported third-quarter net profit of
$166 million, or 33 cents per share, up from $44 million, or 6
cents a year earlier. Excluding items, the company posted
earnings per share of 32 cents.
Analysts, on average, expected earnings per share for the
quarter of 35 cents.
In the most recent quarter, Alcoa reported "productivity
gains" of $377 million across all segments.
Alcoa posted revenue of $5.2 billion, down from $5.6 billion
a year earlier and below estimates of $5.3 billion.
In early trading, Alcoa shares tumbled $3 at $28.51.
(Reporting by Nick Carey in Chicago; Editing by Jeffrey Benkoe)