Aluminum producer Alcoa, Inc. (AA: Quote) said Monday after the markets closed that it swung to a fourth quarter profit, helped by higher pricing, continued strengthening in most end markets, improved productivity and the absence of the negative impact of unusual items that hit prior year results. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations, but is quarterly sales fell shy of analysts' forecast.
The company's net income for the fourth quarter was $258 million or $0.24 per share, compared to a net loss of $277 million or $0.28 per share for the year-ago quarter.
Income from continuing operations for the fourth quarter was $258 million or $0.24 per share, compared to a loss from continuing operations of $266 million or $0.27 per share in the prior year quarter.
The latest quarter results included a positive impact for special items of $35 million, or $0.03 per share, compared to a negative impact of $275 million or $0.28 per share in the prior year quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.19 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Alcoa, the first Dow 30 company to report fourth quarter earnings, said sales for the quarter rose 4% to $5.65 billion from $5.43 billion in the same quarter last year. Fourth quarter sales grew 7% sequentially. Eight analysts had a consensus revenue estimate of $5.68 billion for the fourth quarter.
The company attributed the sequential sales increase to improvement in realized pricing for both alumina (9%) and aluminum (11%) as well as continued strengthening in most end markets.
The company noted end-market revenue performance improved sequentially in Aerospace, Building and Construction, Distribution and Industrial Gas Turbines.
Fourth quarter after-tax operating income or ATOI from the company's Alumina segment was $65 million, down from $70 million in the third quarter but up from $19 million in the fourth quarter of last year. Alumina production totaled 4,119 kmt in the fourth quarter, up from 4,047 kmt in the third quarter and up from 3,897 kmt in the fourth quarter of last year.
The company's Primary Metal segment reported an after-tax operating income of $178 million for the fourth quarter, compared to an after-tax operating income of $78 million for the third quarter and an after-tax operating loss of $214 million for the fourth quarter of last year.
The Flat-Rolled Products segment reported an after-tax income of $53 million for the fourth quarter, down from $66 million for the prior quarter but up from 37 million for the prior year quarter.
Fourth quarter ATOI for Engineered Products and Solutions segment was $113 million, down slighly from $114 million in the third quarter, but up from $57 million the fourth quarter of last year.
Alcoa's fourth quarter profit was the company's biggest since the third quarter of 2008. The aluminum producer 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.
During the quarter, Alcoa announced a financing deal involving joint ventures it holds with Saudi Arabian mining company Ma'aden. The $1.9 billion deal calls for Ma'aden Aluminum Co. and Ma'aden Rolling Co., both joint ventures of Alcoa and Ma'aden, to use the loan to start the Middle East's first fully integrated aluminum smelter and food-grade can-sheet rolling mill.
For the full year, the company reported net income of $254 million or $0.24 per share, compared to a net loss of $1.15 billion or $1.23 per share for the full year 2009.
Income from continuing operations for the full year 2010 was $262 million or $0.25 per share, compared to a loss from continuing operations of $985 million or $1.06 per share in the prior year.
Fiscal 2010 results include a negative impact of $297 million or $0.29 per share, while fiscal 2009 results included negative impact of $300 million or $0.32 per share.
Net sales for the full year 2010 increased 14% to $21.01 billion from $18.44 billion last year.
Analysts expected the company to earn $0.53 per share on revenue of $20.91 billion for the full year 2010.
Alcoa said it exceeded all targets in its Cash Sustainability Program in 2010. Results for the year include procurement savings of $2.64 billion, overhead savings of $509 million, capital spending reduced to $1.21 billion and working capital at 34 days.
Klaus Kleinfeld, Alcoa Chairman and CEO, said Monday, "In 2011, we see aluminum growing another 12 percent on top of last year's 13-percent improvement. We are well positioned to outpace the recovery in the markets we serve and grow shareholder value."
Alcoa projected global demand for aluminum to double by 2020. For 2011, the company projected growth in all end markets on a global basis.
Last week, Alcoa said it plans to restart idled potlines at three aluminum smelters in the United States, which would increase its aluminum production effectively and create 260 new jobs.
Alcoa shares, which have traded in a range of $9.81 to $17.60 over the past year, closed Monday's regular trading session at $16.49, up 7 cents. The stock is currently losing 33 cents or 2.00% in after hours trading.
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by RTT Staff Writer
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