NEW YORK CITY (dpa-AFX) - Alcoa, Inc. (AA), the largest U.S. aluminum producer, said Tuesday after the markets closed that it swung to a third quarter net loss, hurt by continued slump in aluminum prices and a slew of charges.
However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly sales.
At the same time, Alcoa cut its 2012 global aluminum demand growth forecast to 6% from its prior forecast of 7% growth, citing a slowdown in China. The company reaffirmed its long-term outlook that global aluminum demand will double 2010 to 2020.
'Markets seem to be driven more by headlines than fundamentals right now, but Alcoa remains focused on the things within our control', said Klaus Kleinfeld, Alcoa Chairman and CEO. 'We're capitalizing on pockets of strong growth and achieving record profitability in our mid and downstream businesses. We're improving performance in the upstream while optimizing our assets, and across the board we're driving productivity gains.'
Aloca shares are currently gaining 0.33% in after hours trading after closing the day's regular trading session at $9.13, up a penny. The shares trade in a 52-week range of $7.97 to $11.66.
Alcoa said it is on track to deliver against its financial and operational targets in 2012. The company said continued strong productivity growth across the upstream and downstream segments during the third quarter, driven by higher utilization rates, process innovations, lower scrap rates, and usage reductions.
The company's Alumina segment reported an after-tax operating loss of $9 million for the third quarter, compared to after-tax operating income, or ATOI, of $154 million in the same quarter last year. Alumina production totaled 4,077 kmt in the third quarter, down from 4,140 kmt in the third quarter of last year.
The company's Primary Metal segment reported a after-tax operating loss of $14 million for the third quarter, compared to after-tax operating income $110 million in the same quarter last year.
Third quarter ATOI for the company's Global Rolled Products rose 63% to $98 million from $60 million in the prior year quarter.
Third quarter ATOI from the company's Engineered Products and Solutions segment grew 16% to $160 million from $138 million in the year-ago quarter.
For the third quarter ended September 30, 2012, the company reported a net loss of $143 million or $0.13 per share, compared to net income of $172 million or $0.15 per share for the year-ago quarter.
The latest quarter results include special items of $175 million, mainly related to environmental remediation of the Grasse River in New York State, and the settlement of a civil lawsuit brought by Aluminium Bahrain that had been pending in the U.S. District Court in Pittsburgh.
Alcoa confirmed Tuesday that it has settled a civil litigation with Aluminium Bahrain B.S.C. by agreeing to pay $85 million in cash. The company recorded a $40 million charge in the third quarter in addition to the $45 million charge recorded in the second quarter. The company estimates an additional possible after-tax charge of about $25 million to $30 million to reflect an agreement between the shareholders of Alcoa World Alumina LLC regarding the cash costs of the settlement of the Alba civil lawsuit.
Excluding special items, adjusted earnings for the latest quarter were $32 million or $0.03 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to report break-even per share for the third quarter. Analysts' estimates typically exclude special items.
Alcoa, the first Dow 30 company to report third quarter earnings, said sales for the quarter fell 9% to $5.83 billion from $6.42 billion in the same quarter last year, mainly due to a 17% and 20% year-on-year respective decline in the realized metal price and realized alumina price. Eleven analysts had a consensus revenue estimate of $5.54 billion for the third quarter.
Aluminum for delivery in three months on the London Metal Exchange averaged $1,950 a metric ton in the third quarter, down 20% from a year earlier.
Alcoa was among the companies that were hit most during the recession. The company cut more than 20,000 jobs and closed plants in the U.S. and Europe to tide over the global economic slowdown.
The company has taken further steps to cut costs and reallign production in order to remain competitive. Alcoa said in early April that it would reduce its annual alumina production capacity by 390,000 metric tonnes, or about 2%, or to align production with smelter curtailments announced earlier this year and to reflect prevailing market conditions.
In January, the company said that it plans to close or curtail about 531,000 metric tons, or 12% of its global smelting capacity, to cut costs and improve competitiveness.
Alcoa said Tuesday that it continues to execute on curtailments in the upstream business, improving competitiveness and driving toward its stated goal of moving down the cost curve 10 percentage points in smelting and 7 percentage points in refining by 2015.
The company said it has completed partial curtailments at La Coruña and Avilés, Spain, and that the Portovesme, Italy curtailment is underway and will be complete by November 30.
Alcoa has also permanently closed its smelter at Alcoa, Tennessee, and two lines at Rockdale, Texas. When the Portovesme smelter is fully curtailed, Alcoa will have 14% of its highest-cost system smelting capacity offline.
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