Prudence helps Alcoa meet expectations
Alcoa, the largest aluminium producer in the US, expressed cautious optimism that demand for the metal will continue to grow in 2013, helped in part by global growth in the aerospace and construction markets.
The company posted a fourth-quarter profit on Tuesday, in line with Wall Street expectations, and handily beat expectations on revenue, helping calm investors' nerves after a rocky 2012.
"I'm more optimistic that 2013 is a year with upside potential compared to where we came from," Alcoa Chief Executive Klaus Kleinfeld told CNBC on Tuesday.
Shares of Alcoa rose 1.3 per cent in after-hours trading, as investors were buoyed by Alcoa's turn to profit.
Analysts breathed a sigh of relief from the results of the first S&P 500 company to report fourth-quarter results, hoping it was a sign of things to come.
"I think it was a good solid quarter. Not a barnburner but a good quarter," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills. "It's certainly important in this type of environment to look at revenues."
Investors tend to scrutinize Alcoa's results for hints on where the overall economy is headed, as the company's aluminium products are used in the automotive, appliance and airline industries.
The company said it expects global aluminium consumption growth of 7 per cent in 2013, up slightly from 6 per cent in 2012. Alcoa continues to forecast a doubling of global aluminium demand between 2010 and 2020.
Alcoa forecasts global growth in the aerospace, automotive and construction markets, among other industries, in 2013.
Profit in line
The earnings were a positive turn for Alcoa, whose core business of mining bauxite and producing aluminium has been hit in recent years by a persistently low metal price.
For the fourth quarter, the company reported net income of $US242 million, or 21 cents per share, compared with a net loss of $US191 million, or 18 cents per share, in the year-ago period.
Excluding one-time items, net income was $US64 million, or 6 cents per share, in line with average analysts' expectations of 6 cents a share on revenue of $US5.6 billion, according to Thomson Reuters I/B/E/S.
Sales were $US5.89 billion, beating analysts' expectations, but down 1.5 per cent from the year-ago quarter as the average realized price per tonne of aluminium fell slightly.
Alcoa trimmed costs by 12 per cent in the fourth quarter, due in part to fewer restructuring expenses.
The company's realized price for aluminium fell roughly 11 per cent in 2012.