Alcoa Tops 3Q Views as Aluminum Market Rebounds

By Earnings FOXBusiness

Alcoa 3Q earnings top estimates

Earnings HQ: FBN's Cheryl Casone breaks down AA's third-quarter earnings report.

Alcoa (AA) kicked off the unofficial start to earnings season with a better-than-expected report for the third quarter.

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The aluminum maker said Wednesday it earned $149 million, or 12 cents a share, in the period ended Sept. 30. That’s well above the $24 million in earnings, or two cents a share, during the year-ago quarter.

Excluding restructuring costs and other one-time items, adjusted earnings jumped to 31 cents a share from 11 cents.

Revenue climbed 8% to $6.24 billion, topping Wall Street’s consensus estimate of $5.85 billion. Alcoa also beat expectations for adjusted per-share earnings of 23 cents.

Alcoa, which is widely considered an economic bellwether, has been lifted by stabilizing prices for aluminum in recent quarters. Meanwhile, Alcoa is expanding its portfolio beyond aluminum, increasing the firm’s presence in the aerospace and automobile industries.

Alcoa agreed to buy Firth Rixson, which makes jet engine parts, for $2.85 billion in June.

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Shares of the Pittsburgh-based company are up about 51% since the start of the year. The stock rallied 1.7% to $16.35 in after-hours trading Wednesday.

“This quarter is a clear data point that Alcoa’s transformation is delivering,” Chairman and Chief Executive Klaus Kleinfeld said in a statement. “This strong quarter is the direct result of our intense focus on repositioning our portfolio, and we're just hitting our stride.”

In its earnings report, Alcoa affirmed its forecast global aerospace sales growth of 8% to 9% amid demand for large commercial aircraft and regional jets. The company also improved its estimate for automotive production growth to between 2% and 4%, up from a low-end of 1%.

Alcoa hiked its outlook for North American commercial transportation for the second time this year. It now believes the market will expand 16% to 20%, compared to a previous call for 10% to 14%. The company cited rising truck orders.

As for aluminum demand, Alcoa continues to see global growth of 7%.

Alcoa’s metals segment, which includes raw aluminum, booked operating income of $245 million in the latest period, up from $8 million a year earlier. Average realized aluminum prices surged 16% year-over-year and 11% sequentially.

The engineered products division’s operating profit rose 9% to $209 million. Global rolled products saw its operating profit climb 45% to $107 million, and Alcoa said production will continue to ramp up to meet growing demand from auto manufacturers.

Alcoa is one of Ford Motor Co.’s (F) top suppliers for the new F-150 pickup truck, which will feature an aluminum body for the first time.

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