Alcoa Reports First Earnings Loss Since 2009

Alcoa (NYSE:AA) reported its fourth quarter earnings today and saw a loss from continuing operations of $193 million ($0.18 per share), as compared to $172 million in income ($0.15 per share) in the previous quarter and the fourth quarter 2010’s $258 million income ($0.24 per share).

Alcoa’s (NYSE:AA) loss is the first one since the second quarter of 2009.

The company attributed the loss to restructuring charges from a number of different factors: the closure and curtailment of high-cost production capacity, lower aluminum prices, and continued market weakness.

After restructuring and other special items costs, the loss from continuing operations was $34 million ($0.03 per share).

Looking at revenue, Alcoa reported a fourth quarter revenue of $6 billion, a 7 percent drop from the $6.4 billion in the previous quarter but a 6 percent increase from the fourth quarter’s 2010 $5.7 billion revenue.

This quarter’s revenues came in lower primarily from Europe’s sovereign debt crisis and global market uncertainty.

In response to today’s earnings report, Alcoa’s Chairman and CEO Klaus Kleinfeld said the following, “Alcoa turned in solid performance in a volatile year by responding quickly to changing market conditions and relentlessly managing cash. We stayed focused on growth and took aggressive action to cut costs, improve our competitiveness, and strengthen our balance sheet.”

He added, “For 2012, we expect global aluminum demand to grow 7 percent and are forecasting a global deficit in primary aluminum supply.”

The company also disclosed the following growth projections:

  • Alocoa had advanced past the 6.5 percent rate required to its forecast for doubling in global aluminum demand between 2010 and 2020. In 2011, aluminum demand grew 10 percent as compared to 2010’s 13 percent growth.
  • Alcoa sees a growing demand for aluminum, along with market-related production cuts, that will produce a 2012 global aluminum industry deficit of 600,000 metric tons.
  • Alcoa estimates global growth in the following: aerospace (10-11 percent), automotive (3-8 percent), commercial transportation (2-5 percent), packaging (2-3 percent), and building and construction (4-5 percent) markets, according to MSN Money.
Prior to its earnings report, the company announced on January 5 that it will cut its global smelting capacity by 531,000 metric tons, according to Bloomberg. The following U.S. smelters will be affected: Alcoa, Tennessee, and Rockdale, Texas. Today, the company added smelters in Portovesme, Italy, and La Coruna and Aviles in Spain.

Further Reading: Alcoa Inc. Earnings: Margins Shrink as Costs Rise>>

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