Planes, auto demand help Alcoa results beat Wall Street view

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.

Auto sales to drive aluminum demand – Novelis

NEW YORK, Thu May 3, 2012 – Novelis Inc.the world’s largest maker of aluminum sheet, said strong U.S. automotive sales this year would help drive U.S. demand for products using aluminum at a pace consistent with an expected 2 percent growth in U.S. gross domestic product.

“We look at the U.S. economy, all things considered, as stable and running at about a 2 percent GDP, maybe 2.5 percent. Nothing exciting, but still growing,” CEO Phil Martens told Reuters in a recent interview.

He projected global aluminum demand growth of 4 percent to 5 percent in each of the next five years, which would exceed U.S. demand growth.

In the United States, the aluminum chief was particularly upbeat about the automotive sector’s use of aluminum. He forecast that demand will grow dramatically over the next three to five years as the industry shifts to lighter materials to boost fuel efficiency and to reduce emissions.

“We’ve moved from let’s watch this, to let’s study it, we’re not sure what the scale will be but its going to exceed our expectations. Now we’re trying to figure out how to best support it long term,” he said of the movement toward more aluminum use by automakers.

Martens also assessed consumer buying patterns in the company’s two other main markets, saying beverage cans have been relatively stable for six months and consumer electronics demand continues to grow.

But he noted that U.S. consumers can be skittish.

“We still think the consumer in general has the ability to be scared. You have to be very cautious, because last year in the first half we were cruising along and then this debt ceiling debate came along and threw everyone for a loop,” the CEO said.

Alcoa stock up on unexpected first-quarter profit

NEW YORK, Wed Apr 11, 2012 – Shares in Alcoa Inc. rose 7 percent on Wednesday, a day after the aluminum company posted a first-quarter profit instead of a loss Wall Street was expecting.

The late-Tuesday results from Alcoa, a Dow component company, helped lift stocks after five days of losses that had brought down the benchmark Standard & Poor’s 500 index more than 4 percent.

Analyst Tony Rizzuto, of Dahlman Rose & Co, raised his full-year 2012 earnings estimate for Alcoa to 50 cents per share from 40 cents per share following Tuesday’s results.

Alcoa reported income from continuing operations of $94 million, or 9 cents per share, while analysts had expected a loss of 4 cents per share.

“We are encouraged by these results, but are remaining somewhat cautious with our estimates until we see a sustained follow-through in performance,” Rizzuto wrote in a research note.

“If productivity and operational gains can be maintained, we believe the market will begin to look more favorably at the shares,” he said of Alcoa stock, which has dropped over 50 percent since reaching a year-high of $18.19 in April last year.

In morning trading on the New York Stock Exchange, Alcoa shares were 7 percent higher at $9.96.

Aluminum slump has Alcoa staring at quarterly loss

NEW YORK ― Alcoa Inc., the largest U.S. aluminum producer, could end up posting a fourth-quarter loss due to a dizzying drop in the metal’s price in the last six months as the euro zone debt crisis and an economic slowdown in China hurt demand growth.

At least five Wall Street analysts cut earnings estimates in the last week and 18 slashed their full-year 2011 estimates since September for Alcoa, which will announce results on Monday after the market closes.

Analyst Bridget Freas of Morningstar in Chicago noted that Alcoa’s fortunes are tied very closely to the price of aluminum, which fell 6 percent in the fourth quarter.

“We have seen a weakening trend in the last few months and it will show in the results,” she said. “Most analysts are blaming what has happened with the LME (London Metals Exchange) price and we ended the year on a low point.”

The price of aluminum fell 18 percent, from $2,470 per tonne at the end of 2010 to $2015 last week. Traders cited the euro zone crisis and China’s economic slowdown for hurting prospects for demand growth that send the metal on a downward track after May.

And that, says Wall Street, can only hurt Alcoa’s bottom line.

“They had a pretty weak quarter and should come in around the break-even mark,” said Freas, who does not give a quarterly estimate. Her full-year estimate of 80 cents per share is unchanged, she said, since she has already factored in the lower metal price.

“They still face high raw material costs , but the biggest driver (of Alcoa’s results) is the price of aluminum.

“They will not be posting the kind of results (they did) at second-quarter levels,” Freas said.

Novelis reports record fiscal year results; aluminum producer posed for transformation

ATLANTA ― Novelis Inc., a leading producer of aluminum rolled products, today reported record net income attributable to its common shareholder of $116 million and $50 million for the full year and fourth quarter of fiscal 2011, respectively.

Adjusted EBITDA for the year was a record $1,072 million, representing a 42 percent increase from adjusted EBITDA of $755 million posted for the same period a year ago.  This significant increase was driven by higher shipments, price increases and product portfolio and footprint optimization.  For the fourth quarter, adjusted EBITDA was $280 million, a 21 percent increase compared to the same period in the previous year and a record fourth quarter adjusted EBITDA.

“Our record fiscal 2011 results reflect a number of ongoing initiatives to strengthen the business and prepare it for transformational growth,” said Phil Martens, Novelis president and chief executive officer. Martens pointed to a number of specific achievements, including the following:

  • Global realignment of the organization that has allowed Novelis to move toward its “One Novelis” goal of operating as a fully integrated global company.
  • Optimizing the company’s footprint and reducing its cost base by closing underperforming and non-core plants and by investing in recycling initiatives.
  • Focusing on premium products, which now comprise over 70 percent of Novelis’ product portfolio.
  • Investing in strategic initiatives like the expansion of the company’s Pinda mill in Brazil and global debottlenecking projects designed to increase capacity.
  • Refinancing and recapitalizing the business, which positions the company to significantly invest over the next few years to capture strong market growth in its key product segments globally.
  • Operating the company’s assets at or near capacity for the entire year