Published: Wed, October 12, 2016
Economy | By Melissa Porter

Alcoa misses estimates despite profit rise, stock drops

Alcoa misses estimates despite profit rise, stock drops

Klaus Kleinfeld, chairman and chief executive, said the group had steered steady and showed resilience in spite of near-term market challenges.

Alcoa said that it now foresees full-year revenue in a range of $4.8 billion to $5 billion for Global Rolled Products.

Alcoa said global automotive production will rise between 1 per cent and 4 per cent in 2016 and that aircraft deliveries will be flat to up 3 per cent in 2016.

Over all, Alcoa reported a profit of $166 million, or 33 cents a share, compared with $44 million, or 6 cents a share, a year ago.

Although these estimated earnings and revenue declines for the current fiscal year are not encouraging, it should be noted that this is all part of the greater plan of Alcoa and the result of the restructuring efforts of the company, including exiting low margin business operations.

Alcoa Inc. common stock will continue to trade on the New York Stock Exchange under the symbol "AA", although a new CUSIP number (013817507) has been assigned to it as a result of the reverse stock split.

But Kleinfeld said Chinese capacity growth "has not been substantial", adding Alcoa sees aluminium demand increasing 5 per cent in 2016, outpacing supply growth of 3 per cent.

Earnings translated into 32 cents per share, a penny shy of expectations.

Revenue dropped to $5.21 billion from $5.57 billion, as shipments of aluminum products declined. Gross proceeds from Company asset sales completed in 2016 are expected to total approximately $1.2 billion.

"If Alcoa delivers an in-line third-quarter downstream performance, it would have to deliver a very strong fourth quarter to meet 2016 guidance, which seems unlikely based on recent customer commentary".

Investors also clobbered the stocks of the latest companies to issue warnings, led by Rent-A-Center Inc. This includes 1 to 2 percent growth in North America, where overall sales are up slightly, and a strengthening outlook in China. It also produces and manages primary aluminum fabricated aluminum and alumina combined through its active participation in the aspects of the industry including technology mining refining smelting fabricating and recycling. The goal for adjusted EBITDA per metric ton remains unchanged at or above average historical highs of $344.

The New York-based aluminum maker, by tradition the first major US company to report its third-quarter results, again broke down its overall results as they are expected to appear after the split.

Alcoa Inc closed down -0.41 points or -1.29% at $31.37 with 78,58,603 shares getting traded on Friday. Payments are expected to be made in three increments of no less than $50 million each over this 30-month period, with the first payment due no later than six months after the separation of the Company.

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