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posted: 4/13/2010 12:01 AM

Alcoa narrows 1Q loss; sees improving demand

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Alcoa Inc. opened the earnings season with a narrower first-quarter loss as demand for some aluminum products picked up from a year ago and prices rose.

For the quarter that ended March 31, Alcoa on Monday reported a net loss of $201 million or 20 cents per share.

That compared with a net loss of $497 million, or 61 cents a share, a year ago, when the company struggled with weak demand in the depths of the recession.

Alcoa's first-quarter results include $295 million, or 29 cents a share, in one-time charges related to the health care reform law and the closing of two smelters.

Analysts surveyed by Thomson Reuters forecast, on average, earnings of 10 cents a share. They typically exclude one-time items. Revenue rose nearly 20 percent to $4.9 billion. That missed Wall Street's estimate of $5.24 billion.

"2010 will clearly be better than 2009 but it's going to be below historic norms in many of the markets," Klaus Kleinfeld, president and CEO, told analysts in a conference call.

Kleinfeld expects Alcoa to benefit from a rebound in global automotive production this year, while the company's packaging business for cans and other containers remains flat.

Kleinfeld says aluminum consumption worldwide should grow by 10 percent in 2010, driven strongly by demand from China and improving demand in the U.S. and Europe.

Alcoa's average realized price per metric ton of aluminum in the first quarter was $2,331, up from $1,567 in the same period a year ago.

Argus Research analyst Bill Selesky doesn't think that means you'll soon be paying more for drinks in aluminum cans or other products made with the metal. "I think you have to see if it continues," Selesky said. "I think on a short-term basis, it really has little effect on the consumer."

Selesky described the quarter as lackluster. "All the year-over-year numbers look very good. However, the sequential results are somewhat lagging. Sales from the fourth quarter to the first quarter, the overall demand is down 11 percent."

Alcoa, based in Pittsburgh, is the first company in the Dow Jones Industrial average to issue earnings results, and its performance can reflect economic trends because of its diverse customer base, which ranges from aerospace and construction to electronics and beverage cans.