July 10, 2012
Alcoa has reported quarterly revenue and profit that beat Wall Street's expectations even though prices for its aluminium were at nearly two-year lows.
The company posted an operating profit of $US61 million, or 6 cents per share, excluding a $US45 million charge as part of its effort to settle a lawsuit with Aluminium Bahrain, plus other items.
On that basis, it beat Wall Street estimates of 5 cents per share, which had been lowered in recent weeks because of falling aluminum prices.
On a net basis, Alcoa lost $US2 million, or nil cents per share, compared with a net profit of $US322 million, or 28 cents per share, in the same quarter last year.
Revenue fell 9 per cent to $US6 billion, as aluminum prices dropped 18 per cent from last year, Pittsburgh-based Alcoa said on Monday. But that also exceeded analyst expectations of $US5.8 billion.
"The numbers look weak and they are, but the revenues are actually above expectations. There is a big focus on revenue this earnings season because people want to see that growth," said Tim Ghriskey, chief investment officer at Solaris Asset Management.
With an overhang of high inventories and a 20 per cent drop in prices since March, many aluminum producers are losing money. Benchmark three-month London Metal Exchange aluminum stood at $US1,915 a tonne on Monday - hovering above the $US1,880 low of June 2010.
Alcoa is locked in a lawsuit with Aluminum Bahrain, which has accused it of conspiring to overcharge the company, known as Alba, for alumina supplies.
Alcoa could take another $US75 million charge based on that effort to settle the lawsuit. It said it had also held talks with the U.S. Department of Justice and the Securities and Exchange Commission to settle ongoing investigations, which could lead to additional charges.
Alcoa stock was up 2 cents at $US8.78 in after-market trading on the New York Stock Exchange.