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Alcoa (AA) Gains After Better-Than-Expected Q1

 April 10, 2012 04:35 PM

The world's largest aluminum producer Alcoa Inc. (NYSE:AA) has kick started the earnings season with better-than-expected first quarter earnings on strong productivity growth and improved market conditions. The company ended streak of earnings disappointments over the last year, sending its shares up 5.04% in aftermarket.

Earnings from continuing operations for the first quarter were $94 million or $0.09 per share, down from $309 million or $0.27 per share last year. Adjusted earnings from continuing operations for the latest quarter were $105 million or $0.10 per share.

Sales increased to $6.01 billion from $5.96 billion. Analysts had expected a loss of $0.04 per share on revenue of $5.77 billion.

[Related -Do Earnings Mean Anything Anymore?]

Third-party Alumina sales decreased to $775 million from $810 million, while primary metals sales declined to $1.94 billion from $1.98 billion. Third-party sales from global rolled products declined to $1.85 billion from $1.89 billion, while sales from engineered products and solutions increased to $1.39 billion from $1.25 billion.

Shipments of aluminum products increased to 1.295 million metric tons from 1.212 million metric tons.

Alumina production rose to 4.15 million metric tons from 4.02 million metric tons, while third-party alumina shipments grew to 2.29 million metric tons from 2.21 million metric tons.

Aluminum production increased to 951,000 metric tons from 904,000 metric tons, while third-party aluminum shipments rose to 771,000 metric tons from 698,000 metric tons.

[Related -Alcoa Inc (NYSE:AA) Q4 Earnings Preview: What To Expect?]

A 9% decrease in the realized price of aluminum and a 13% drop in the realized price of alumina, year-on-year, were partially offset by higher third-party shipments in the upstream businesses, better volume and mix in the midstream business, and improved volume in the downstream business.

Looking ahead into the fiscal 2012, Alcoa is raising its global growth forecast for the aerospace market 3 percentage points (13%-14%)

The company expects global growth in the automotive of 3% to 7%, commercial transportation of 1% to 5%, packaging of 2% to 3%, building and construction of 2.5% to 3.5%, and industrial gas turbine of 1% to 2% markets.

In 2012, Alcoa continues to project a global aluminum supply deficit and reaffirmed its forecast that global aluminum demand would grow 7% in 2012, on top of the 10% growth seen in 2011.

As previously announced, Alcoa is curtailing 390,000 metric tons of its system refining capacity to improve the company's competitive position and to reflect updated internal demand following smelting curtailments announced earlier this year.

Combined with the curtailments and closures of high-cost smelting capacity, these actions will improve the competitiveness of Alcoa's Primary Products business and help the company meet its previously stated goal of moving down the cost curve 10 percentage points in smelting and 7 percentage points in refining by 2015.

AA closed Tuesday's regular session down 2.92% at $9.32. The stock has been trading between $8.45 and $18.19 for the past 52 weeks.

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