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Alcoa Q3 Loss Widens, To Sell Non-Core Assets

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Alcoa Corp. (AA), the largest producer of aluminum in the US, Wednesday posted a wider-than-expected loss for the third quarter, reflecting a drop in revenues as well as one-time charges related to two smelters in Spain. The company also announced a "portfolio review" of its smelting and refining capacity as well as asset sales to boost profits and lower costs. Shares are up 6% in extended trading hours.

Pittsburgh-based Alcoa reported third-quarter net loss of $221 million or $1.19 per share, compared with last year's loss of $6 million or $0.03 per share last year.

The results include $139 million of special items, including $134 million in charges associated with the divestiture of the Avilés and La Coruña facilities in Spain, and a $37 million restructuring charge for severance costs related to implementing a new operating model.

Adjusted loss for the quarter were $82 million or $0.44 per share, compared with adjusted profit of $154 million or $0.82 per share last year. On average, 9 analysts polled by Thomson Reuters expected loss of $0.33 per share.

Sales for the quarter dropped to $2.57 billion from $3.39 billion last year. Analysts had a consensus revenue estimate of $2.59 billion.

CEO Roy Harvey said, "Our third quarter showed continued strong operational performance and stability across our aluminum value chain. Our Bauxite and Alumina segments reached new quarterly production records since our launch in 2016, and our aluminum business continued to rebound. While market and pricing challenges persisted through the quarter, our cash balance remained steady."

Aluminum shipments dropped to 708,000 metric tons from to 806,000 metric tons last year, while alumina shipments rose to 2.38 million metric tons from 2.23 million metric tons last year.

Looking forward to 2019, Alcoa projects bauxite shipments to range between 47.0 and 48.0 million dry metric tons. Total alumina shipments are expected to be between 13.6 and 13.7 million metric tons with anticipated operational improvements and higher year-on-year production. Aluminum is expected to ship between 2.8 and 2.9 million metric tons.

Further, Alcoa announced a multi-year portfolio review to drive lower costs and sustainable profitability.

The company plans to pursue non-core asset sales over the next 12 to 18 months to generate an estimated $500 million to $1 billion in proceeds. Alcoa also plans to realign its operating portfolio, and has placed under review 1.5 million metric tons of smelting capacity and 4 million metric tons of alumina refining capacity, over the next five years.

AA closed Wednesday's trading at $19.16, down $0.30 or 1.54%, on the NYSE. The stock, however, gained $1.21 or 6.32% in the after-hours trade.

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