Alcoa quarterly loss smaller than expected

Friday, Jul 10, 2009
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NEW YORK: Alcoa Inc posted a third consecutive quarterly loss on Wednesday, but cost cuts helped the largest US aluminium maker beat Wall Street estimates by a large margin, sending its stock higher. Chief executive officer Klaus Kleinfeld later told analysts that there were signs weak demand for aluminium – which has prompted production cuts and plummeting metals prices in the last nine months – might be easing. “We still have challenging global markets, but there are some pockets of growth,” he said, citing such near-term catalysts as China, production curtailments, de-stocking of aluminium inventories and government stimulus programmes. China would be a near-term importer of aluminium, but Beijing’s stimulus programmes for its own industry would eventually change the picture, Kleinfeld said on a conference call. “We don’t expect imports (to China) to go on forever.” The Alcoa chief said although the company still saw a 7% decline in global aluminium demand this year, the company expected US auto-build rates to rise in the second half of 2009 as carmakers replenished low inventories. In the beverage can sector, Alcoa expects a “reasonably stable” performance with steady US demand in the summer. Alcoa, like other metals makers, has pared back operations and cut jobs in the face of weak prices as the poor global economy cut demand from the construction, electronics and vehicle sectors. Kleinfeld said the company had achieved some US$1bil in procurement savings through the first half of the year, or about two-thirds of the full-year target. Overhead savings year-to-date were around US$270mil, or 134% of the full-year target for 2009, he said. The second-quarter net loss was US$454mil, or 47 cents per share, compared with earnings of US$546mil, or 66 cents per share, in the same quarter of 2008, the Pittsburgh-based aluminium producer said. But the loss from continuing operations was 32 US cents per share and, excluding restructuring, the loss was 26 cents. That was better than the 38 cents loss analysts were expecting, according to Reuters Estimates. Revenue slumped to US$4.2bil from US$7.2bil a year earlier, as Alcoa curtailed aluminium and alumina production in response to reduced demand. — Reuters

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