Alcoa, Inc. (AA: Quote), the largest U.S. aluminum producer, said Monday after the markets closed that it swung to a small second quarter net loss, hurt by continued slump in aluminum prices and a slew of charges.
The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly sales beat analysts' forecast.
Aloca shares are currently gaining 0.34% in after hours trading after closing the day's regular trading session at $8.76, up 3 cents. The shares trade in a 52-week range of $8.21 to $16.16.
The company said strength in its midstream and downstream businesses continued to mitigate volatility in its upstream businesses.
Second quarter after-tax operating income or ATOI from the company's Alumina segment dropped 88% to $23 million. Alumina production totaled 4,033 kmt in the second quarter, up from 4,024 kmt in the second quarter of last year.
The company's Primary Metal segment reported a after-tax operating loss of $3 million for the second quarter, compared to after-tax operating income $201 million in the same quarter last year.
The company's Global Rolled Products segment reported an after-tax income of $95 million for the second quarter, down 4% from $99 million in the prior year quarter.
Second quarter ATOI from the company's Engineered Products and Solutions segment grew 7% to $160 million from $149 million in the year-ago quarter.
Alcoa attributed the 9% decline in its second quarter sales mainly to an 18% and 17% drop in the realized metal price and realized alumina price, respectively.
Aluminum for delivery in three months on the London Metal Exchange averaged $2,019 a ton in the second quarter, down 23% from a year earlier.
The company also said it continued strong productivity growth across all businesses during the second quarter, driven by higher utilization rates, process innovations, lower scrap rates and usage reductions.
"Alcoa maintained revenue strength and solid liquidity by driving high profitability in our mid and downstream businesses and by reducing costs and improving performance in our upstream businesses," said Klaus Kleinfeld, Alcoa Chairman and CEO.
For the second quarter ended June 30, 2012, the company reported a net loss of $2 million or $0.00 per share, compared to net income of $322 million or $0.28 per share for the year-ago quarter.
The latest quarter results included special items related to reserves for environmental remediation, uninsured losses related to the Massena fire, a net discrete tax charge, and restructuring and other charges. The company also recorded a $45 million charge for proposing to settle the Alba civil suit. The company currently estimates an additional possible charge of up to $75 million to settle the suit.
Excluding special items, earnings for the latest quarter were $61 million or $0.06 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.06 per share for the second quarter. Analysts' estimates typically exclude special items.
Alcoa, the first Dow 30 company to report second quarter earnings, said sales for the quarter fell 9% to $5.96 billion from $6.59 billion in the same quarter last year. Eleven analysts had a consensus revenue estimate of $5.81 billion for the second quarter.
Alcoa was among the companies that were hit most during the recession. The company cut more than 20,000 jobs and closed plants in the U.S. and Europe to tide over the global economic slowdown.
The company has taken further steps to cut costs and reallign production in order to remain competitive. Alcoa said in early April that it would reduce its annual alumina production capacity by 390,000 metric tonnes, or about 2%, or to align production with smelter curtailments announced earlier this year and to reflect prevailing market conditions.
In January, the company said that it plans to close or curtail about 531,000 metric tons, or 12% of its global smelting capacity, to cut costs and improve competitiveness.
Alcoa said Monday that 390,000 metric tons of its system refining capacity was taken offline during the second quarter. Previously announced smelter curtailments are on track and expected to be complete by the end of the year, the company added.
Alcoa also reaffirmed its global aluminum demand growth projection of 7% and a global aluminum supply deficit in 2012.
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by RTT Staff Writer
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