Alcoa Misses Profit Forecasts - TheStreet

Alcoa Misses Profit Forecasts

Alcoa misses Wall Street's bottom line target for its fourth quarter, but revenue comes in stronger than expected.
Publish date:

Updated from Monday, Jan. 11



) --


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missed Wall Street expectations for its fourth-quarter bottom line.

The aluminum giant, the first Dow component to report earnings each quarter, announced on Monday that it had eked out an adjusted per-share profit of one cent, which excludes a restructuring charge of 28 cents a share. Analysts were expecting 6 cents a share, according to a survey by Thompson Reuters.

Still, that's better than the fourth quarter of 2008, when Alcoa lost $929 million, or $1.16 a share. The improvement came as aluminum prices spiked in recent months.

Revenue in the quarter amounted to $5.4 billion, down slightly from the $5.7 billion top line posted a year ago, but surpassing the consensus forecast of $4.82 billion.

Including all the special items, Alcoa lost $277 million, or 28 cents a share, in the fourth period.

The prepared CEO statement contained the predicable bright side: "This was a tough year for the aluminum industry -- a price crash, demand destruction, and credit crunch. Yet, today Alcoa is stronger than when the year started," Alcoa boss Klaus Kleinfeld said in the company's press release.

As proof of that stronger position, Kleinfeld cited stronger cash reserves and severe cost cuts -- Alcoa laid off some 13,000 workers, slashed overhead by $412 million and reduced capital spending by 50% in 2009.

Despite Kleinfeld's words, Alcoa's stock price fell in aftermarket action by 94 cents, or 5.4%, to $16.51, after closing Monday at $17.45, up 43 cents.

Among Alcoa's major business units, the "primary metals" segment saw sales rise to $1.9 billion from $1.58 billion in the year-ago period. Alcoa sold aluminum at an average price of $2,155 per metric ton during the just-ended fourth quarter. A year earlier, the average selling price was $2,125. Prices then cratered, dropping to between $1,500 and $1,700 in the first and second quarters of 2009 before going on a prolonged run as the year drew to a close.

In the fourth quarter, a weakening U.S. dollar clipped profits in its primary metals segment, Alcoa said. The European Commission also dinged the company recently -- to the tune of about $250 million -- by ruling that Alcoa had to pay higher electricty tariffs on its aluminum smelters in Italy.

Elsewhere, the company's aerospace and construction businesses continued to erode. Sales in the engineered-products segment, which includes aerospace and construction, dropped to $1.1 billion from $1.4 billion a year ago. Alcoa, a longtime


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supplier, will ship parts to the aircraft maker for use in the 787 Dreamliner.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.