Alcoa said last night that it slid to a second quarter loss, dragged down by hefty charges and weak aluminum prices.
But the results edged above analysts' expectations and the aluminum maker backed its forecast for solid global demand later this year.
Alcoa's report marks the start of quarterly earnings season, and investors watch closely for signs of how earnings may unfold for other companies.
Its performance reflects broader economic trends because aluminum is used in a wide range of products from airplanes and cars to beverage cans and consumer electronics.
The aluminum industry has faced rising inventories and lacklustre demand as the global economy has slowed. Sales to the construction industry continue to be weak. Aluminum prices dropped 18% in the past year, dragging Alcoa's second-quarter revenue down 9% to $5.96 billion.
The lower revenue combined with environmental remediation charges, fire damage costs, restructuring expenses and a $45m civil settlement resulted in Alcoa posting a loss of $2m for the second quarter, compared with profit of $322m the same time last year.
Price, rather than demand, is of more concern for aluminum producers because it is difficult for them to make a profit when the price is below $2,000 per metric ton, analysts said. Recently the price has been around $1,900 a ton.
But Alcoa's revenue still topped analysts' revised forecast of $5.83 billion, and adjusted earnings of 6 cents per share beat the consensus estimate by a cent.
Alcoa said car and plane makers bought more aluminum, and sales to packaging and commercial transportation companies also improved.
Analysts expect car makers to have a record sales year, and aircraft makers like Boeing and Airbus are ramping up production.
"Although aluminum prices are down, the fundamentals of the aluminum market remain sound," Klaus Kleinfeld, Alcoa chairman and chief executive said.
Alcoa backed its forecast for a 7% increase in global demand this year and predicted a coming aluminum shortage. Kleinfeld said that China is curtailing production, which he expects to bring the global inventory surplus into balance.
