Alcoa Estimates Improved Second-Quarter Results - Stock Off

Alcoa expects to report improvement in its second-quarter top- and bottom-line results.
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Alcoa  (AA) - Get Report shares slipped Wednesday even after the aluminum major estimated stronger-than-expected second-quarter earnings and revenue.

The Pittsburgh company said it benefited from rising productivity and cost cuts, despite the burden of the coronavirus pandemic.

The company estimates a net loss of $190 million to $205 million, or $1.02 to $1.10 a share, for the second quarter. That's narrowed from a loss of $402 million, or $2.17 a share, in the year-earlier quarter.

Alcoa projects adjusted earnings per share at break-even to down 8 cents a share, better than the FactSet-survey derived consensus analyst estimate of a 58-cent loss.

The company expects to report revenue of $2.1 billion to $2.18 billion for the quarter, down from $2.71 billion a year earlier. The estimate would beat the FactSet consensus of $2.09 billion.

Alcoa will report second-quarter results on July 15.

The company estimates a 5% increase in mining output, a 2% increase in refining output and a 3% increase in primary aluminum output in the second quarter compared with the first quarter.

"Demand for aluminum value-added products declined" in Q2 from Q1, "with volume shifting into lower-priced commodity-grade ingot," the company said in a statement. 

"Additional volume from the progressing restart" at the Becancour smelter in Quebec "is expected to partially offset the premium price decline."

“In the second quarter, we realized gains in productivity [and] cost savings and also increased our cash balance,” Alcoa Chief Executive Roy Harvey said in a statement.

“Now, we’re working to increase overall liquidity and gain even greater flexibility as we execute on our strategy, including the ongoing portfolio review and the sale of noncore assets.”

At June 30, Alcoa’s cash balance is expected to exceed $950 million, up from $829 million as of March 31.

Alcoa shares recently traded at $11.01, down 2%. The stock has jumped 56% over the past three months, but is off 53% over the past 12 months.