Alcoa Inc (NYSE:AA) unofficially kicked off the second quarter earnings reporting season tonight. The aluminum maker posted adjusted earnings of 15 cents per share on $5.3 billion in sales, against Wall Street’s estimates of 9 cents per share in earnings on $5.2 billion in revenue. Net earnings were 9 cents per share.

Alcoa Inc Jumps After Earnings Beat

Lower aluminum prices hit Alcoa’s sales

Alcoa said revenues declined 10% year over year on the back of a 14% decline mostly due to lower prices for aluminum and alumina and impacts from curtailed, divested or closed operations. The company also said it had a 4% benefit from recent acquisitions and organic growth.

The company’s Arconic or value-add segment recorded a 1% increase in revenue, bringing it to $3.5 billion. Alcoa said acquisitions raised the segment’s revenue 5%, although a 4% negative impact from metal pricing mostly offset that benefit.

The company’s Engineered Products and Solutions business saw a 15% increase in revenues to $1.5 billion, which was a new record. After-tax operating income for the segment increased 3% to $294 million, including $68 million for Global Rolled Products, $180 million for Engineered Products and Solutions and $46 million for Transportation and Construction Solutions. The segment achieved $176 million in productivity savings during the quarter and is on track to deliver $650 million in savings this year.

Alcoa’s Upstream business saw a 7% sequential increase in sales to $2.3 billion. Alumina prices increased 22% sequentially, while aluminum prices rose 2% and organic growth contributed positively as well. Third-party revenue increased 9% sequentially to $1.9 billion. The upstream segment recorded $150 million in after-tax operating income, representing a sequential increase on the back of better pricing, productivity savings, and a more competitive portfolio. The segment achieved $199 million in productivity savings this year and is on track to deliver $550 million in savings this year.

Alcoa provides market update

Alcoa management described this year as a “transition year” for global aerospace manufacturers with new jet engines accelerating demand. They expect the second half of this year to bring improvements as customers ramp their new platforms, and they look for a strong 2017. Alcoa noted a 1% year over year decline in large commercial aircraft deliveries in the first half of this year but added that they should rise 6% in the second half of this year compared to the first half. As a result, the company predicts that they will end the year flat to up 3% and see growth in the double digits next year.

The company expects global automotive production to grow 1% to 4% this year and sai orders for heavy-duty gas turbines and spare parts should remain strong. Alcoa also expects 2% to 4% growth in the global airfoil market and 1% to 3% growth in packaging.

Alcoa also said the separation of its Upstream and Arconics segments is on track to be completed in the second half of this year. The aluminum maker’s stock surged 4.14% to $10.56 in after-hours trades.