Alcoa Inc Jumps After Earnings Beat

Reuters  Jason Reed

Reuters Jason Reed

CHICAGO, July 11 Metals company Alcoa Inc on Monday reported a lower quarterly net profit, citing a 10 percent decline in revenue due to lower prices for aluminum and alumina and plant operations that have been curtailed, closed or sold off.

Furthermore, BMO Capital Markets analysts David Gagliano and Matt Cartoceti wrote Monday that the firm sees potential for Alcoa to be among the metals and mining sector players reporting the least encouraging outlooks for upcoming quarters.

The company reported the sale of non-essential assets, which are expected to generate $1.2 billion during 2016, of which $815 million have been received year-to-date.

The company recorded $0.15 in earnings per share (EPS) compared to the street's $0.10 forecast. After-tax operating income for the segment increased 3% to $294 million, including $68 million for Global Rolled Products, $180 million for Engineered Products and Solutions and $46 million for Transportation and Construction Solutions.

Engineered Products and Solutions had record revenue of $1.5 billion, and record ATOI of $180 million, up 15% from previous year. The segment achieved $176 million in productivity savings during the quarter and is on track to deliver $650 million in savings this year. This decline was partially offset by a 4% positive impact from recent acquisitions and organic growth, according to the official earnings release.

The future combined Alcoa Corp. reported a total revenue of $2.3 billion and was up 7 percent sequentially. Operating earnings were $150 million, also an improvement from the first quarter. In the alumina business, third-party sales declined 25%.

Alcoa management described this year as a "transition year" for global aerospace manufacturers with new jet engines accelerating demand.

Investors are scrutinizing the profitability of the so-called downstream units that will be renamed Arconic when the company splits in two by the end of the year.

The company said its expects global large commercial aircraft deliveries to increase 6 percent in the second half of 2016 from the first six months.

The company expects global automotive production to grow 1% to 4% this year and sai orders for heavy-duty gas turbines and spare parts should remain strong. The stock is trading up more than 3% during post-market hours.

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