Alcoa Inc. said its fourth-quarter revenue slumped 18% amid sharply lower aluminum prices.
Continue Reading Below
Shares rose 1.9% to $8.15 in after-hours trading as adjusted per-share earnings, which exclude restructuring costs and other one-time items, beat expectations. Through the close of the regular session, the stock had fallen 50% over the past year.
Alcoa—the first major U.S. company to report its fourth quarter results—said revenue dropped to $5.25 billion in the latest quarter from $6.38 billion a year earlier. Analysts polled by Thomson Reuters expected revenue of $5.29 billion.
Raw-aluminum prices have fallen over 25% to about $1,500 per ton in the past year amid a supply glut that worsened this year as demand has faltered in China, the world's largest consumer of aluminum and one of the metal's largest producers.
In response, Alcoa has been phasing out aluminum production in high-cost areas such as the U.S., Australia and Europe, and instead focusing on making raw aluminum in places where power—a key component in aluminum production—is cheaper. Just last week, Alcoa said it would close one of its biggest U.S. aluminum smelters and idle production at an alumina refining plant in Texas.
Alcoa also has been refocusing its business around the more profitable business of making products for the automotive and aerospace markets. Earlier Monday, Alcoa said it has struck a $1.5 billion long-term supply contract with General Electric Inc.'s aviation unit.
Continue Reading Below
Alcoa already has signaled plans to spin off its automotive and aerospace business in the second half of 2016, joining other big companies that have been splitting off businesses with higher growth potential.
Overall, Alcoa reported a fourth-quarter loss of $500 million, or 39 cents a share, compared with a year-earlier profit of $159 million, or 11 cents a share, a year earlier. Excluding restructuring-related costs and other items, adjusted per-share earnings fell to 4 cents from 33 cents a year ago.
Analysts expected adjusted per-share profit of two cents.
Alcoa's smelting division reported operating loss of $40 million, compared with a year earlier operating earnings of $267 million. Average realized prices fell 30%.
By Tess Stynes