Alcoa Inc Shares Slip After Earnings, Revenue Miss

Alcoa released its latest earnings report before opening bell this morning, posting adjusted earnings of 32 cents per share on $5.2 billion in revenue. Analysts had been expecting earnings of 33 cents per share and $5.3 billion in sales. It should be noted that the aluminum maker finished its one-for-three reverse stock split, so the per-share earnings numbers reflect that split.

Alcoa feels pricing pressures

Alcoa’s GAAP earnings rose to 33 cents per share from 6 cents per share last year. The company said the 6% decline in revenue was the result of curtailed or closed operations, lower prices for alumina, and other pricing pressures.

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Alcoa’s Arconic Segments division recorded a 1% year over year decline in revenue to $3.4 billion as aerospace customers adjusted their delivery schedules and softness in transportation and pricing pressures weighed. Revenue for the Alcoa Corporation segment remained flat sequentially as alumina prices remained low and closed or curtailed operations impacted the segment. Third-party revenue in the segment increased 1% sequentially to $1.8 billion.

The aluminum maker closed the sale of the Intalco smelter wharf during the third quarter, along with other excess property. In the fourth quarter, Alcoa expects about $250 million in additional asset sales to bring the total amount of sales during 2016 to about $1.2 billion.

Alcoa updates industry outlooks

The company said the global aerospace is going through a transition with new engine launches accelerating demand and outpacing airframe component demand. It expects full-year aircraft deliveries to increase 3% as de-stocking partially absorbs this. Alcoa projects 1% to 4% growth in global automotive production and heavy duty truck, trailer and bus growth to be flat to up 2% as North America declines offset most of the growth in Europe and China. However, this is an increase in guidance.

The aluminum maker expects the global packaging market to grow by 2% to 3% this year, an increase from the previous outlook of 1% to 3% in growth. It expects between 2% and 4% growth in the global airfoil market as low natural gas prices and adoption of high-efficiency industrial gas turbines drives orders. Alcoa projects a global alumina deficit of 1.6 million metric tons and a global aluminum deficit of 615,000 metric tons this year. It looks for a 5% increase in global aluminum demand versus a 3% growth in global aluminum production.

Shares of Alcoa slusmped by as much as 4.16% to $30.20 in premarket trading this morning.