Aluminum producer Alcoa, Inc. (AA) said Monday after the markets closed that its fourth quarter loss narrowed from last year, helped by improving aluminum prices and smaller restructuring charges. However, the company's quarterly earnings per share, excluding items, came in below analysts' expectations.
The company's net loss for the fourth quarter was $277 million or $0.28 per share, compared to a net loss of $1.19 billion or $1.49 per share for the year-ago quarter.
Loss from continuing operations for the fourth quarter was $266 million or $0.27 per share, compared to a loss from continuing operations of $929 million or $1.16 per share in the prior year quarter.
The latest quarter results include net charges for restructuring, special items and discrete tax items of $275 million or $0.28 per share.
On average, 15 analysts polled by Thomson Reuters expected the company to earn $0.06 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 fell 4.5% to $5.43 billion from $5.69 billion in the same quarter last year. Fourth quarter sales rose 18% sequentially. Seven analysts had a consensus revenue estimate of $4.82 billion for the fourth quarter.
The company noted that all markets but aerospace, commercial building and construction, and industrial gas turbines improved from the previous quarter.
Fourth quarter after-tax operating income or ATOI from the company's Alumina segment was $19 million, down from to $65 million in the third quarter and $162 million in the fourth quarter of last year. Alumina production totaled 3,897 kmt in the fourth quarter, up from 3,614 kmt in the third quarter 3,776 kmt in the fourth quarter of last year. The Juruti bauxite mine in Brazil was officially commissioned this quarter.
The company's Primary Metal segment recorded an after-tax operating loss of $214 million for the fourth quarter, compared to an after-tax operating loss of $8 million for the third quarter and an after-tax operating loss of $101 million for the fourth quarter of last year. The latest quarter results includes $250 million in charges related to the recent European Commission's ruling on electricity tariffs affecting the company's Italian smelters. Results were impacted by an additional $23 million as a result of higher energy costs in Italy since that ruling.
The Flat-Rolled Products segment reported an after-tax operating income of $37 million for the fourth quarter, compared to an after-tax operating income of $10 million for the prior quarter and an after-tax operating loss of $106 million for the prior year quarter.
Fourth quarter ATOI for Engineered Products and Solutions segment fell 24% sequentially and 22% year-over-year to $57 million.
The company generated free cash flow of $761 million in the fourth quarter, and finished cash flow positive for the first time since the second quarter of 2008.
The company ended the fourth quarter with $1.5 billion of cash on hand. The company's debt-to-capital ratio stood at 38.6% at the end of the quarter, a 390 basis point improvement from a year ago.
For the full year 2009, the company reported a net loss of $1.15 billion or $1.23 per share, compared to a net loss of $74 million or $0.10 per share for the full year 2008.
Loss from continuing operations for the full year 2009 was $985 million or $1.06 per share, compared to income from continuing operations of $229 million or $0.27 per share in the prior year.
Sales for the full year 2009 fell 31% to $18.44 billion from $26.90 billion the previous year.
Alcoa was hit hard the past year by soft demand from the automotive, construction and aerospace industries in light of the economic downturn. The company has cut thousands of jobs, reduced output, slashed its dividend, trimmed spending and raised $1.3 billion through common stock and convertible notes offerings to cope with the situation.
The company said Monday it exceeded all targets on its Cash Sustainability Program for 2009. The company reduced overhead by $412 million, more than 200% of the 2009 target. Procurement spending was reduced by $2 billion in 2009, $500 million above the target for the year. Reductions in working capital generated more than $1.3 billion in cash or more than $500 million above the 2009 target of $800 million.
The company's capital expenditures in the quarter were $363 million and $1.6 billion for the year, a more than 50% reduction from 2008.
"This was a tough year for the aluminum industry - a price crash, demand destruction, and credit crunch. Yet, today Alcoa is stronger than when the year started," said Klaus Kleinfeld, Alcoa President and CEO. "We reshaped our cost structure and portfolio for profitable growth. And, we built the cash reserves to weather current economic uncertainties and invest in opportunities for future growth. Alcoa will benefit from those achievements for many years to come."
Alcoa shares, which have traded in a range of $4.97 to $17.60 over the past year, closed Monday's regular trading session at $17.45, up 43 cents or 2.53%. The stock is currently losing 81 cents or 4.64% in after hours trading.
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