Alcoa (NYSE:AA) kicked off earnings season Monday after the bell, revealing first quarter profits matching analysts' expectations, but narrowly missed forecasts on its sales figures.
Alcoa shares were under significant selling pressure in early trading Tuesday on concerns over how much upside was left for aluminum prices. Macquarie Capital and BMO Nesbitt Burns downgraded the stock, while UBS boosted its rating of the aluminum-giant.
The biggest U.S. aluminum maker's profit on continuing operations was 27 cents a share, or $309 million, as compared with a net loss of 20 cents a share the year before. The company's first-quarter revenue was up 22% on a year-over-year basis to $6 billion, less than the $6.07 billion Wall Street was expecting.
"After a strong period of outperformance for both aluminum and Alcoa over the past six months, we believe that Alcoa shares are likely to trade in line with the sector over the next few quarters," Curt Woodworth, an analyst at Macquarie Capital, wrote in a research note.
Alcoa said it believes aluminum demand will grow 12% in 2011, after climbing 13% in 2010.
Gains in the demand for aluminum and the price of the metal, coupled with productivity improvements, boosted the company's bottom line. However, weakness in the U.S. dollar and rising energy and material costs was a drag on its profitability. The company's first-quarter net profits were also adversely affected by one time costs associated with two acquisitors and restructuring.
The company's food packaging and commercial transportation end markets showed the most growth in the first quarter, gaining 45% and 37% respectively.
"Our outlook for the rest of 2011 and beyond remains very positive," said Klaus Kleinfeld, Alcoa's Chairman and Chief Executive Officer, in a release.