With Split Looming, Alcoa Reports Worse-Than-Expected Quarter
October 11 2016 - 8:50AM
Dow Jones News
Alcoa Inc., less than a month away from splitting itself in two,
reported worse-than-expected earnings growth in the latest quarter
as lower alumina pricing and changes to aerospace delivery
schedules dented revenue.
Shares fell 6.2% to $29.50 in premarket trading.
The company is splitting its raw-aluminum operations, which will
keep the Alcoa name, from the firm that will house the company's
faster-growing businesses supplying the aerospace and automotive
markets, called Arconic. The split is slated for Nov. 1. Klaus
Kleinfeld, now chief executive of Alcoa, will be CEO of
Arconic.
The New York-based aluminum maker, by tradition the first major
U.S. company to report its third-quarter results, again broke down
its overall results as they are expected to appear after the
split.
At the units that will form Arconic, revenue fell 1% from a year
earlier to $3.4 billion, reflecting adjustments to delivery
schedules in the aerospace industry and softness in North America
commercial transportation and pricing pressures.
Alcoa's traditional metals operations—which include smelting,
mining and refining—reported revenue of $2.3 billion, which it said
was roughly the same as the year-ago quarter, reflecting continued
low alumina prices and the impact of curtailed and closed
operations.
Over all, Alcoa reported a profit of $166 million, or 33 cents a
share, compared with $44 million, or 6 cents a share, a year ago.
Excluding certain items, the company earned 32 cents a share, up
from 21 cents a year ago. Analysts polled by Thomson Reuters
expected 35 cents a share.
Revenue fell 6% to $5.21 billion, below analysts' projections of
$5.31 billion.
Alcoa's raw aluminum business has been hammered this decade by
an oversupply of aluminum generated largely by China that has
caused prices on the London Metal Exchange to fall to around $1,600
a ton, down from around $2,500 a ton five years ago. To cope with
weak prices, Alcoa has been closing high-cost smelters in the
U.S.
The earnings report Tuesday was slated to be Alcoa's last as a
single firm.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 11, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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