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Alcoa profit misses as aluminum prices slide
[LONDON] Alcoa Inc reported a smaller-than-expected quarterly profit, hurt by slumping prices for aluminum and other commodities and unfavorable foreign exchange rates. "The biggest challenges were commodities prices being under pressure and the wide currency swings," Klaus Kleinfeld, Alcoa's chief executive officer told Reuters.
Alcoa's shares fell about 5 per cent in extended trading.
Alcoa said last month it will separate the smelting operations, also called the upstream business, from the faster-growing plane and car parts business, or value-add business.
Benchmark London Metal Exchange prices fell to six-year lows toward the end of September, a nearly 20 per cent drop from a year earlier.
Alcoa's third-quarter revenue slid to US$5.6 billion, down 21 per cent mainly due to closures of non-competitive facilities, Kleinfeld said. The decline in revenue was partially offset by a 10 percent increase from aerospace, automotive and acquisition growth, he said. "For us, when you look at the upstream side, our revenues are down, but some of it is absolutely part of the transformation and it is a good thing," he said.
Analysts on average had expected Alcoa to earn 13 cents per share on sales of US$5.65 billion, according to Thomson Reuters I/B/E/S.
Additionally, the company believes global aluminum demand will grow by 6.5 per cent in 2015 and will double during this decade, Kleinfeld said. But the CEO said the company sees an aluminum deficit in 2016.
Net income attributable to Alcoa fell to US$44 million, or 2 cents per share, in the third quarter ended Sept 30 from US$149 million, or 12 cents per share, a year earlier.
Excluding special items, Alcoa earned 7 cents per share.