Alcoa operations in Newburgh, Ind.DANIEL R. PATMORE
Alcoa Inc. reported a fourth-quarter profit Monday, after a year-ago loss, beating Wall Street estimates on higher aluminum prices and projected demand for the metal will rise in 2011.
Alcoa shares were down 1.6 per cent at $16.23 (U.S.) in after-hours trade on the New York Stock Exchange. The stock closed at $16.49 during the regular session.
Income from continuing operations was $258-million, or 21 cents per share, excluding special items, compared with a loss of $266-million, or 27 cents per share in the same quarter of 2009. Net income was 24 cents per share.
Revenue rose 4 per cent to $5.7-billion, said the company which is traditionally the first Dow component to report in the quarter. Analysts on average were expecting earnings of 19 cents per share and revenue of $5.71-billion.
Alcoa said improved earnings were driven by higher pricing, continued strengthening in most end markets and improved productivity as a result of cost-cutting measures.
Results were offset somewhat by a weaker U.S. dollar and higher energy and raw material costs, it said.
Aluminum prices, which slumped dramatically during the recession, rose 11 per cent last year - 5 per cent in the fourth quarter alone - and are now near a two-year peak of $2,500 per tonne.
"In 2011, we see aluminum growing another 12 per cent on top of last year's 13 per cent improvement," said chief executive officer Klaus Kleinfeld. "We are well positioned to outpace the recovery in the markets we serve."
He later told CNBC that global aluminum markets continue to grow and that in the construction and building markets the company sees "a little light at the end of the tunnel."
Analyst Bridget Freas, of Morningstar in Chicago, said she was not surprised by Alcoa's strong earnings.
"They've done a good job at improving margins and have cut overhead. Of course, the better aluminum pricing was what drove the higher-than-expected earnings," Ms. Freas said.
"I think it's a good sign that they expect global growth up 12 per cent this year. It's optimistic, but reasonable."