Aluminum giant, Alcoa Inc. (NYSE:AA) and YUM! Brands Inc. (NYSE:YUM), the world’s largest restaurant chain jump-start the earnings season for the third quarter on Tuesday with optimism.
Despite negative expectations surrounding Alcoa, days ahead of its earnings report, Alcoa Inc. (NYSE:AA) managed to beat the consensus estimate of Wall Street analysts. For the third quarter, the aluminum giant reported $5.83 billion revenue and earned $32 million, or 3 cents per share. Analysts projected a break-even result, or one cent earnings per share, and $5.6 billion revenue.
Alcoa Inc. (NYSE:AA)’s Chairman and chief executive officer, Klaus Kleinfeld, believed that the current economic issues serve as primary drivers in the lower inventories, and the supply and demand of products. According to him, “the market sentiment dominates pricing.”
The company reported $143 million in losses and adjusted its expectations for aluminum demand for the full year 2012, due to the slowdown China’s economy. Alcoa expects a 6 percent growth rate for aluminum demand for 2012. The company remained positive that the long-term growth rate for demand in aluminum would be doubled by 2020.
Overall Alcoa remained impervious amid challenging market conditions. The company recorded performance improved across its alumina and primary metals business segments, while its midstream and downstream businesses recorded solid performance. Its productivity increased across its downstream and upstream segments during the period.
The aluminum giant expects strong demand for its products within the aerospace, automotive, beverage can packaging, commercial and industrial construction, and gas turbine industries.
Meanwhile, Alcoa agreed to pay $85 million to settle its pending civil dispute with Aluminum Bahrain (Alba). The companies renewed their business relationship and signed a long-term aluminum supply agreement. Alcoa will start shipping alumina to the Bahraini smelting company.
As expected, YUM! Brands (NYSE:YUM) delivered a strong financial performance during the third quarter. The company exceeded the average expectations of analysts of 97 cents earning per share on $3.6 billion revenue.
YUM! Brands (NYSE:YUM) reported $1.00 earnings per share and $ 471 million profit for the third quarter. Excluding special items, the company’s EPS was 99 cents per share, and its revenue was $3.57 billion. The company’s EPS increased by 19 percent, and its revenue rose by 9 percent, compared with its earnings and revenue during the same period in 2011.
The Chinese appetite for KFC, Taco Bell, and Pizza Hut boosted the company’s financial performance during the quarter. YUM! Brands’ overall operating profit rose by 18 percent. The company’s profit increased by 22 percent in China, 13 percent in the United States, and 14 percent in YUM Restaurants International (YRI).
David Novak, chairman and CEO of the company, told investors that YUM! Brands increased its full-year 2012 earnings outlook to 13 percent, due to its “very strong sales and profit” across its business divisions. The company expressed confidence in its capability to deliver double-digit growth amid difficult economic conditions. YUM! Brands was not heavily affected by the European debt crisis, because a majority of its restaurants are located in Great Britain, France, and Germany.
Did YUM! Brands (NYSE:YUM) outperformed Alcoa in the 3Q earnings season? The answer is yes. Both companies kicked off the earnings season with a positive outlook and optimism.