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Alcoa cuts jobs as earnings fall
[NEW YORK] Aluminium giant Alcoa reported a steep drop in first-quarter earnings on tumbling aluminum prices Monday as it announced it was cutting as many as 2,000 jobs.
Net income for the quarter ending March 31 was US$16 million, down 92 per cent from the year-ago period.
Revenues dropped 15 per cent to US$4.9 billion.
Results were hit by a 40 per cent drop in alumina prices and a 26 per cent decline in aluminium prices. Prices of industrial commodities have been in retreat due to slowing demand from China and other emerging economies.
Those effects were partly countered by US$364 million in cost cuts. Alcoa also continued to curtail low-efficiency industrial operations, including shutting down a smelter in Indiana and curtailing some refining capacity in Texas.
Alcoa said it had already cut 400 jobs and settled on plans to eliminate another 600. Alcoa is also "evaluating another reduction of up to 1,000 positions," citing tough market conditions.
Chief executive Klaus Kleinfeld said plans remain on track to divide the company in two, with one division specializing in commodity products and another on value-added products for the aerospace and auto industries.
Alcoa trimmed its forecast for aerospace, projecting 6-8 per cent global growth in 2016, down from 8-9 per cent previously expected. But it said long-term demand remains strong in the sector.
"Powerful trends continue to drive long-term market strength" for commercial jet airframes and jet engines, Alcoa said.
In automotive, Alcoa continues to see global growth of 1-4 per cent, with 1-5 per cent growth in North America.