Industrial giant Alcoa Inc. on Thursday reported sharply lower third-quarter profit as the metals company has been closing mines and cutting smelting capacity in response to lower aluminum prices brought on by a global glut.

It is Alcoa's first quarterly report since it announced last month it plans to split operations: one business that would make parts for cars and planes, and another producing raw aluminum and its ingredients.

Oversupply, exacerbated by China's economic slowdown, has battered aluminum prices, which have fallen about 14% since the beginning of the year to below $1,600 a ton on the London Metal Exchange, the world's largest venue for metals trading.

The New York-based company, in its typical role as banner-carrier for quarterly earnings periods, posted a profit of $44 million, or 2 cents a share, down from $149 million, or 12 cents a share, a year earlier. Excluding restructuring-related charges and other items, profit was 7 cents a share, down from 31 cents a share a year earlier.

Revenue fell 11% to $5.57 billion.

Analysts surveyed by Thomson Reuters had projected 13 cents a share on $5.65 billion in revenue.

Shares, down 30% this year, fell 3.7% to $10.60 in late trading.

With the aluminum market troubled, Alcoa, the world's largest aluminum company by volume, has been veering off its path as a pure aluminum producer.

Founded in the late 1880s in Pittsburgh as the Pittsburgh Reduction Co., it developed its first product in 1889: the prototype of the aluminum tea kettle. Now based in New York, Alcoa makes a wide array of products from Reynolds Wrap to aluminum spaceframes for Ferrari's Gran Turismo vehicles and high-technology airfoils for jet engines.

Alcoa's smelting division swung to a $59 million loss in the latest period, compared with a $245 million operating profit in the year-ago period. The company's average "third-party realized price," or what it charges outside customers, fell 25% to $1,901 a metric ton. Alcoa has been cutting its high-cost smelter capacity around the world.

Meanwhile, the automotive industry's shift to lighter cars to meet feel-efficiency standards continues to fuel results.

The global rolled products division, which makes sheet for the auto and beverage-can industries, reported a 10% increase in operating profit to $62 million, led by automotive sheet shipments.

With the aerospace market buoyant, Alcoa's been expanding into hi-tech titanium and nickel alloys for planes. This week, it announced a billion-dollar deal to supply Airbus Group SE with fasteners and other parts.

However, operating profit its division known as "engineered products" fell 2.6% to $151 million, bolstered by acquisitions and higher volumes.

Alcoa has been particularly bullish about its business processing bauxite into alumina, which is used to make aluminum. On Thursday, it reported operating profit surged threefold to $212 million from the year earlier.

Write to Maria Armental at maria.armental@wsj.com

 

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(END) Dow Jones Newswires

October 08, 2015 16:55 ET (20:55 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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