Alcoa Sales Exceed Estimates at New-Look Company as Prices Jumpby
Aluminum prices rose 13% from a year earlier in LME trading
Report is first chance for investors to parse new Alcoa
Alcoa Corp., the aluminum producer that split from its jet- and car-parts business last year, reported higher-than-expected sales as the price of the metal rose.
Fourth-quarter revenue climbed 3.5 percent from a year earlier to $2.54 billion, New York-based Alcoa said Tuesday in a statement. That topped the $2.38 billion average estimate of eight analysts tracked by Bloomberg.
The report is investors’ first chance to parse how the new Alcoa, which retained the legacy commodity assets, is faring without the so-called downstream businesses that were hived into Arconic Inc. Shares in Alcoa have surged since the split in early November, helped by a rebound in aluminum after years of low prices and cutbacks in mining and smelting.
“Pricing picked up in the latter part of the fourth quarter, and it is continuing to rise thus far in this quarter,” Lloyd O’Carroll, an independent analyst in Richmond, Virginia, said in a telephone interview. “Particularly with pricing continuing to escalate so far this year, that would argue for higher revenue” this quarter compared with the fourth quarter.
Alcoa shares rose 2.4 percent to $38.39 at 6:40 p.m. after regular trading in New York. The stock surged 63 percent from Nov. 1 through Tuesday’s close.
The price of aluminum for delivery in three months rose 13 percent from a year earlier in the fourth quarter to average $1,709.22 a metric ton. Alumina, a raw material needed to make the commodity in a process that requires massive amounts of electricity, increased in December from a year earlier, according to Bloomberg Intelligence. The alumina surge also helped boost revenue for Alcoa.
The company reported a net loss of $125 million in the fourth quarter, compared with a loss of $826 million a year earlier. Profit excluding one-time items was 14 cents a share, missing the 20-cent profit estimated by analysts.