PITTSBURGH, Wed Oct 10, 2012 – Stronger demand for aluminum products from airplane and automobile producers helped Alcoa Inc.’s third-quarter profit before one-time charges beat Wall Street’s expectations, offsetting weak aluminum prices and worries about China’s slumping economy.
But, even with its strong downstream business, Chairman and CEO Klaus Kleinfeld said the company had noticed a “slight slowdown” in some regions and end markets.
As a result, Alcoa lowered its global aluminum consumption outlook to 6 percent growth from 7 percent previously for 2012. “The main driver for this is China,” Kleinfeld told Wall Street analysts on a conference call on Tuesday.
China’s aluminum demand growth was 11 percent in the first half of the year, he said, but “we believe this is going to come down in the second half to 7 percent.
“I’m pretty confident given the already announced China stimulus package which is going into the ground … (it) will be picking up speed but this is probably going to take until the end of the fourth quarter,” he said.
Kleinfeld was bullish about Alcoa’s downstream businesses, noting that the aerospace and automobile markets were coming back strongly from the recession.
“Global aerospace remains solid,” with a backlog of 8,500 planes, or eight years work, he said. “In autos, we are seeing an increase of 11 to 15 percent (annual) growth in North America.”
Airplane maker Boeing Co., truck builder Navistar International Corp. and other manufacturers have been using more engineered aluminum parts from Alcoa to lighten the weight of planes and vehicles.
Making aluminum bolts, wheels, aircraft fuselages and other components for these customers is proving more lucrative for Alcoa than just supplying basic aluminum of which the price has dropped to near two-year lows.
Alcoa’s core metal-making business is struggling to make a profit.