Alcoa Inc reported quarterly profit and revenue on Tuesday that beat analysts’ expectations as the aluminum producer focused on selling products from its more profitable downstream business, which includes truck wheels and aircraft fuselages.
Shares of the largest U.S. aluminum producer rose 2 per cent in after-hours trade to $15.15 U.S.
“It looks like it was a very good quarter both in earnings and revenues and, of course, everybody’s looking for the revenues,” said Tim Ghriskey, chief investment officer of Bedford Hills, New York-based Solaris Asset Management, which owns Alcoa bonds.
Against a backdrop of weak aluminum prices, Alcoa has been expanding its downstream business, which lately has been more profitable than its upstream businesses of mining bauxite, refining into alumina and smelting alumina to produce aluminum.
It has also been expanding into other metals. Last month Alcoa announced a deal to buy Firth Rixson, a manufacturer of jet engine parts made largely out of nickel-based alloys and titanium, for $2.85-billion. That came shortly after two U.S. investments to produce more nickel-based alloy products.
“Our second quarter results prove Alcoa’s transformation is in high gear,” Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer said in a statement.
On rising truck orders, Alcoa increased its 2014 growth estimate for the North America commercial transportation market to a range of 10 to 14 per cent, up from a previous range of 5 to 9 per cent in the first quarter.
The company kept unchanged its growth estimates for other end markets.
Alcoa earned $138-million, or 12 cents a share, compared with a loss of $119-million, or a loss of 11 cents, a year earlier. Sales were flat at $5.8-billion.
Excluding the impact of special items, earnings were $216-million, or 18 cents a share for the three months ended June. That compared with earnings of $76-million, or 7 cents a share, in the same period a year ago.
Analysts expected earnings of 12.4 cents a share on revenue of $5.66-billion, according to Thomson Reuters I/B/E/S.
Alcoa said that all its business segments were profitable during the quarter. The Engineered Products and Solutions unit, its downstream business, achieved its highest results with after-tax operating income of $204-million.
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