Alcoa, the largest US aluminium producer, last night reported better than expected quarterly earnings after its smelting business returned to profitability and gains at a unit that makes car and aerospace parts.
Third-quarter net income excluding plant-closure costs and other one-time items was 11 cents a share, New York-based Alcoa said.
The engineered products division, a supplier of aerospace companies such as Boeing and Airbus, saw after-tax operating income rise 22% to $192m, while the primary metals business earned $8m.
Alcoa’s "downstream divisions" - which make rolled, forged and extruded aluminium products - have accounted for a growing proportion of the company’s revenue in the past year.
They are the focus of efforts by chairman and chief executive Officer Klaus Kleinfeld to redirect Alcoa to capitalise on rising demand for high-tech aluminium components in the latest generation of cars and commercial aircraft.
Third quarter sales fell to $5.77 billion from $5.83 billion, exceeding the $5.63 billion average estimate.
The rolled-product unit, which supplies aerospace and packaging customers, posted after-tax operating profit of $71m, down from $89m a year earlier. The segment that mines bauxite and refines alumina saw earnings rise to $67m, from a year-earlier loss of $9m.
Earnings at the primary-metals unit, the company’s largest by revenue, have come under pressure this year from a decline in metal prices. But the unit’s profit compared with a $14m loss a year earlier and the projected $30m loss that was the average of three analysts’ estimates.
Alcoa said the improvement was driven by more efficiency gains and favourable foreign-exchange rates.
Alcoa, typically one of the first US companies to report quarterly earnings, was removed from the Dow Jones Industrial Average in September after 44 years. As well as the 8.5% drop in its share price so far in 2013, Alcoa’s credit rating was cut to junk by Moody’s Investors Service in May.
Global output of aluminium has exceeded demand for a ninth year in a row, according to data compiled by Bloomberg.
