Bloomberg News

Alcoa Posts First Quarterly Loss Since 2009 After Aluminum Drop

January 09, 2012

Jan. 9 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum producer, reported its first quarterly loss in more than two years after prices tumbled for the lightweight metal.

Alcoa posted a fourth-quarter loss of $191 million, or 18 cents a share, compared with $258 million, or 24 cents, a year earlier, the New York-based company said today in a statement. Earnings excluding restructuring costs were 3 cents a share, matching the average projection from 18 estimates compiled by Bloomberg. Sales rose 6 percent to $5.99 billion from $5.65 billion.

The loss is Alcoa’s first since the second quarter of 2009, which followed a slump in aluminum prices amid the global financial crisis. Aluminum fell in 2011, with the benchmark three-month price in London averaging 11 percent lower in the fourth quarter than a year earlier. Alcoa said last week it would close 12 percent of its smelting capacity amid falling prices.

“Excess global capacity, surplus stocks and expected slowdown from EU continues to weigh on aluminum prices, pressuring smelting profitability, Jorge Beristain, an analyst at Deutsche Bank AG who has a ‘‘hold’’ recommendation on the shares, said today in note before the earnings were released.

The company will cut its global smelting capacity by 531,000 metric tons. U.S. smelters at Alcoa, Tennessee, and Rockdale, Texas, will be affected, it said Jan. 5. Alcoa said today it will will curtail production at smelters in Portovesme, Italy, and La Coruna and Aviles in Spain as part of the plan.

Alcoa is the first company in the Dow Jones Industrial Average to report earnings for the quarter. The stock slumped 44 percent last year, the second-biggest decline on the Dow Jones Industrial Average after Bank of America Corp.’s 58 percent drop.

Alcoa is a fully integrated aluminum producer. It mines bauxite, an ore that contains aluminum, and refines it into alumina, the raw material used by aluminum smelters. As well as selling aluminum to industrial users, Alcoa makes products such as can sheet and components for cars and aircraft.

Aluminum supply has exceeded demand and inventories have soared, leaving some smelters unprofitable at current metal prices. Global output exceeded demand by 953,516 tons in the first three quarters of 2011, according to data compiled by Bloomberg Industries.

(Alcoa will hold a conference call at 5 p.m. New York time, which can be accessed at LIVE <GO> or by dialing +1-617-786-2901, pass code 36291193.)

--Editors: Steven Frank, Simon Casey

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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