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Tuesday, October 07, 2008

Lower Aluminum Prices Slam Alcoa's 3Q Results

FOXBusiness

Aluminum giant Alcoa (AA) kicked off what is expected to be a dismal earnings season on a gloomy note, reporting a 52% plunge in third-quarter earnings and saying it will halt a stock-buyback plan.

Alcoa earned $268 million in the third quarter, or 33 cents per share, compared with $555 million, or 63 cents per share, a year ago. The company's revenue grew to $7.2 billion from $6.5 billion in the third quarter of 2007.

Analysts polled by Thomson Reuters had been expecting stronger earnings of 50 cents per share on $7.1 billion in sales.

Alcoa's results were weighed down by higher costs, a weakened economy and diving aluminum prices.

The company said it will stop all non-critical capital programs and suspend its share buyback program. Alcoa also said it will make targeted reductions, starting by halting production at its Rockdale, Texas, smelter.

“We have taken action to conserve cash and maximize profitability through very adverse economic conditions," CEO Klaus Kleinfeld said in a statement.

Alcoa warned the margin squeeze due to tumbling aluminum prices will have a greater impact going forward.

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