Alcoa Delivers Again on Earnings

Alcoa Inc. (NYSE: AA) announced its third-quarter earnings after the market closed Wednesday. It reported earnings of $0.31 per share and $6.24 billion in revenues. The same quarter in the previous year showed earnings of $0.11 per share and $5.76 billion in revenues.

Thomson Reuters had consensus earnings estimates of $0.23 per share on $5.85 billion in revenues. Estimates for the fourth quarter are $0.20 in earnings per share and $5.79 billion in revenues.

Alcoa posted a net income of $370 million, excluding special items. The revenue figure of $6.24 billion was actually up 8% from the same period in the previous year.

Alcoa shares were up 0.75% at $16.07 at the closing bell, after having been down more than 2% early on Wednesday. The after-hours initial reaction after earnings had the stock up 1.5% at $16.30, and Alcoa’s pre-earnings consensus estimate was up at $16.88 prior to higher or lower price target revisions.

Other key data from the earnings release included:

• Engineered Products and Solutions had its best ever quarterly results at $209 million in after-tax operating income.
• Global Rolled Products after-tax operating income rose 45% year-over-year to $103 million.
• Alumina and Primary Metals gained for the 12th consecutive quarter. Primary Metals’ adjusted EBITDA per metric ton was $612, the strongest since second quarter 2008, reflecting a lower cost.
• Alcoa continues to project 2014 global aerospace sales growth of 8% to 9% (robust demand for both large commercial aircraft and regional jets).
• Alcoa tightened its projection for 2014 global automotive production growth from a previous range of 1% to 4% in the second quarter to 2% to 4%.
• Global packaging sales growth of 2% to 3% and global building and construction sales growth of 4% to 6% in 2014 remain unchanged.
• Industrial gas turbine market was again projected to decline by 8% to 12%, due to lower orders for new gas turbines and spare parts.

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The company further said:

Alcoa increased its 2014 estimate of production growth for the North America commercial transportation market to a range of 16 to 20 percent from a previous range of 10 to 14 percent in the second quarter, and 5 to 9 percent in the first quarter. The higher estimate is based in part on a 43 percent increase in third quarter truck orders year-over-year and strong backlogs. Globally, Alcoa continues to expect a flat commercial transportation market of negative 1 to positive 3 percent in 2014 due to ongoing weakness in the European market.

Additionally, Alcoa reaffirmed its 7 percent global aluminum demand growth projection for 2014. The Company sees a global aluminum deficit of 671,000 metric tons in 2014 and a further tightening of the alumina market, with a surplus declining to 389,000 metric tons from 824,000 metric tons in second quarter 2014.

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