Updated with additional information from the conference call and analyst comments.
NEW YORK (
(AA - Get Report) crushed revenue projections on Monday as the aluminum producer benefited from a bump in global aluminum prices but the outperformance didn't flow to the bottom line as earnings met a lowered consensus expectation.
The Pittsburgh, Pa.-based company reported earnings from continuing operations, excluding special items, of $364 million, or 32 cents a share, for its fiscal second quarter ended June 30 on revenue of $6.59 billion.
The average estimate of analysts polled by
was for earnings of 32 cents a share in the June period on revenue of $6.31 billion. As recently as Friday, the estimate was for earnings of 33 cents a share in the latest quarter.
In the same period a year earlier, the Dow component earned $138.5 million, or 13 cents a share, on a continuing operations basis on revenue of $5.19 billion.
"We turned in another strong quarter, with solid revenue and earnings growth," said Alcoa CEO Klaus Kleinfeld. "Although the economic recovery is uneven, the overall outlook for Alcoa - and for aluminum - remains positive."
The company said profits were held back in the latest quarter by weakness in the U.S. dollar and higher materials and energy costs.
Indeed, aluminum prices jumped as demand increased, which caused aluminum producers to reopen previously dormant smelters.
"I think the big headline is the beat on the topline growth," Bridget Freas, an aluminum analyst at Morningstar, told
. She added that the numbers indicate Alcoa faced cost pressures, but that the recovery is still intact.
China also returned to its industry-leading position over the quarter after it had
shuttered a massive amount of its high-cost smelters amid rising energy costs
. This was expected by the industry and signaled strength in aluminum manufacturing overall.
Alcoa's shares closed on Monday at $15.91, down 2.9%. The stock was last quoted off another 3 cents in after-hours action to $15.88 on volume of 2.15 million, according to
. Earlier in the extended session, it dipped as low as $15.40.
Alcoa CEO Kleinfeld also reiterated the company's demand expectations for this year and beyond.
"Demand for aluminum continues to rise and so does growth in our major markets," Kleinfeld said. "These factors support our projection that aluminum demand will grow 12 percent this year and will double by 2020."
Alcoa said it expects to face continued worldwide currency fluctuations, as well as further increases in the costs of raw materials and energy.
Record growth in the alumina sector contributed to strong revenue in the second quarter, Kleinfeld said on the company's conference call. Alcoa invested in a new facility in San Luis, Brazil, and cranked production back up in many of its U.S. smelters, which paid off as global alumina demand rose.
Alcoa now expects production of 22 billion cans of aluminum from China and 20 billion cans from Brazil in 2011. The company estimates that in ten years the China number will jump to 100 billion cans, and Brazil's figure will double.
Alcoa's reiteration of its belief that global aluminum demand will increase by about 12% was good news, according to Morningstar's Freas, who feared that the company might back off that forecast.
-- Written by Joe Deaux in New York.
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