Kicking off earnings season on a mixed note, Alcoa (NYSE:AA) revealed a stronger-than-expected 58.5% jump in first-quarter profits on Monday although the aluminum maker’s revenue trailed forecasts.
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Shares of the Pittsburgh-based materials company retreated about 1% in after-hours action on the mixed report after jumping nearly 2% during regular trading.
While Alcoa is traditionally the first Dow component to report results, its significance as a bellwether stock for the broader market has waned in recent years.
The company said it earned $149 million, or 13 cents a share, last quarter, compared with a profit of $94 million, or 9 cents a share, a year earlier.
Excluding one-time items, it earned 11 cents a share, besting the Street’s view for EPS of 8 cents.
However, revenue dipped 3% to $5.8 billion, trailing consensus calls from analysts for $5.88 billion. Alcoa said the revenue slowdown was the result of a decline in aluminum prices and its decision to scale back of production in Europe.
“This was a strong quarter led by record profitability in our downstream business, improved results in our midstream business, and remarkable upstream performance in the face of weak metal prices," CEO Klaus Kleinfeld said in a statement.
Kleinfeld said Alcoa's downstream business now represents 72% of its total after-tax operating income.
Looking ahead, Alcoa reaffirmed its call for global aluminum demand growth of 7% in 2013 and “balanced” aluminum and alumina markets.
On the other hand, Alcoa warned it sees “a slightly tighter market as supply contracts,” downgrading its surplus projection for aluminum to 155,000 metric tons this quarter from 535,000 metric tons in the fourth quarter.
Meanwhile, Alcoa also said it remains unclear if it will reach a settlement with U.S. regulators over an investigation into racketeering and fraud charges filed by Aluminum Bahrain, or Alba.
Alcoa warned that any settlement would be material to its results and failure to reach a deal would result in a trial, making it impossible to “predict an outcome or to estimate its reasonably possible loss.”
After initially rising, Alcoa's shares headed south and were recently off 0.95% to $8.31 in after-hours action. Alcoa rallied 1.82% to $8.39 during regular trading, trimming its 2013 loss to 3.3%.