Alcoa Earnings Rebound as Aluminum Use Rises in Autos
Alcoa Inc. (AA), the largest U.S. aluminum producer, reported its highest earnings in three years after prices rebounded and demand increased from car, truck and plane makers.
Profit excluding one-time items was 31 cents, the New York-based company said yesterday, surpassing the 22-cent average of 17 estimates compiled by Bloomberg.
Alcoa’s improved performance in 2014 follows a period of depressed earnings as prices slumped. Chairman and Chief Executive Officer Klaus Kleinfeld has increased its focus on higher-margin aluminum products and rationalized the traditional smelting business.
Third-quarter net income rose to $149 million, up sixfold from a year earlier. Sales increased 8.2 percent to $6.24 billion, beating the $5.84 billion average estimate.
After-tax operating profit rose to a record at Alcoa’s engineered products and solutions unit and gained 45 percent in the rolled-aluminum segment.
Alcoa is benefiting from higher commercial-jet orders and a shift to aluminum components instead of steel among automakers such as Ford Motor Co., which plans to make its F-150 pickup truck with aluminum body panels.
“Auto body sheet has a much higher margin than anything except aircraft,” Northcoast’s O’Carroll said. “I think 2015 is going to get a pretty big lift of usage on the F-150 and of course all of the margin benefit of that.”
Source: businessweek- Alcoa Earnings Rebound as Aluminum Use Rises in Autos
