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Alcoa on Monday afternoon posted a lower net profit for the quarter, with falling prices of alumina and aluminum pressuring its revenue. At the same time plant operations were scaled back prior to the spinoff later in 2016 of its smelting business.
Alcoa reconfirmed its prior forecast for growth in global automotive products for 2016 of between 1% and 4%, but announced the continued weakness in the market for North America that would offset the anticipated growth in bus, trailer and heavy-duty truck production in China.
Klaus Kleinfeld the Alcoa CEO said the company is now more flexible and continuing to perform at high rates in an environment of low pricing.
Kleinfeld said that once the environment of pricing returns and that time is hard to determine when, the performance of the company would go up.
The company, based in New York said the net income for its second quarter was down to $135 million equal to 9 cents a share compared to last year for the same quarter of $140 million equal to 10 cents a share.
Analysts were expecting earnings to reach 9 cents a share.
The company announced that eliminating special items, it posted earnings of 15 cents a share.
During the second six months of 2015, Alcoa will split into two, as it will spin off its smelting operations under the name Alcoa.
Its business of value added, focused mostly on the automotive and aerospace industries will operate using the name Arconic.
The company, which sells aluminum and titanium parts in the aircraft industry, announced that it expects it 2016 full year global large aircraft deliveries to be flat to as high as 3% followed by strong 2017 growth in the double digits.
Alcoa faces a tough market as the prices of aluminum have remained near historic lows. A number of aluminum producers made accusations that China sold metal below the market rates into global markets that were already oversupplied.
China denied the accusations, saying that excess capacity was a global issue.
Alcoa, as part of its plans of restructuring, had divested 40% of its smelting capacity. It said it is expecting a global deficit of alumina in 2016 of over 1.5 million metric tons.
Revenue at Alcoa for its just ended quarter reached $5.3 billion, which was 9% lower than last year during the same quarter when it was $5.9 billion. Analysts were expecting Alcoa to post revenue of $5.2 billion for the quarter.
Shares of Alcoa were up over 3% Monday prior to the earnings report being posted and during trading after hours dropped by 1%.