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By Austen Hufford
Alcoa Corp. said it would continue to import aluminum from Canada even as new tariffs make the metal more expensive.
The aluminum-maker said Wednesday that it incurred $15 million of costs last month for the newly implemented tariffs on imports from its foreign operations, primarily from Canada. Tariffs on steel and aluminum imported into the U.S. went into effect at the start of June.
Going forward, the company expects to pay $12 million to $14 million a month while the tariffs are in place.
Shares dropped 12% Thursday as the company cut its profit outlook for the year, citing the tariffs and increased energy costs.
Alcoa, which made about 14% of the aluminum it produced globally last year in the U.S., reiterated its opposition to the blanket tariffs, saying they are not the right way to help the U.S. industry. The Pittsburgh-based company has been critical of companies in China overproducing aluminum and supports reining them in through negotiated reductions.
Industry watchers say that the U.S. dependence on aluminum from Canada is unlikely to change as not enough aluminum is made domestically and U.S. smelters are some of the oldest and most expensive in the world.
Alcoa recently restarted a portion of its idle smelter in southern Indiana, but Chief Executive Roy Harvey said the company has no immediate plans to bring other curtailed smelters in the U.S. back into service.
"Shielding uncompetitive smelters from the realities of global supply and demand has resulted in frequent oversupply in the global market for the last decade," Mr. Harvey said on a call with analysts. "Tariffs will not solve the challenges facing the aluminum industry."
Conversely, Mr. Harvey said that U.S. producers are benefiting from higher domestic aluminum prices caused by the tariff. Alcoa saw its average realized price on primary aluminum rise 19% from the year before.
Nucor Corp., the largest U.S.-based steelmaker, said Thursday that it has benefited from the rising prices. The company's average sale price per ton in its second quarter rose 17% from a year earlier as the company ramped up production.
Alcoa also wants to get Canada exempt from the tariff as the company operates three smelters there.
For its second quarter, revenue at Alcoa rose 25% to $3.58 billion. The company brought in $75 million in earnings in the quarter, the same as a year before. On a per-share basis, earnings fell to 39 cents from 40 cents, as the average number of shares rose. Adjusted for certain items, earnings per share came in at $1.52, above the $1.32 expected by analysts.
For adjusted earnings before interest, taxes, depreciation, and amortization, known as Ebitda, the company expects $3.0 billion to $3.2 billion this year, down from $3.5 billion to $3.7 billion previously.
Bob Tita contributed to this article.
Write to Austen Hufford at email@example.com
(END) Dow Jones Newswires
July 19, 2018 15:32 ET (19:32 GMT)
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