Alcoa's Earnings Slide as Demand Drops

Alcoa

(AA) - Get Report

said first-quarter profits fell 46% from last year amid a significant decline in demand and weak pricing for aluminum, but the company managed to meet analysts' estimates.

The world's No. 1 aluminum producer recorded a profit of $218 million, or 26 cents a share, compared with $404 million, or 46 cents a share, last year. Following the news, shares of Alcoa were rising 2.6% to $37.84.

The latest first-quarter results includes a reduction of $34 million, or 4 cents a share, from the effect of a required accounting change covering goodwill. Excluding the accounting change, Alcoa earned 22 cents a share, in line with analysts' estimates. The company, always the first member of the

Dow Jones Industrial Average to report its quarterly results, also posted revenue of $4.98 billion, down from $6.18 billion last year.

"The near-term operating climate remains challenging, and we continue to focus on managing what is in our control," Chairman and CEO Alain Belda said in a press release.

The latest first quarter was hurt by a decline in the price for primary aluminum, which fell 11% from last year, and a significant drop in demand, Alcoa said. "The decline in both price and demand dampened the benefits derived from ongoing cost reduction efforts," the company said.

By the end of the first quarter, Alcoa had cut annual costs by $436 million, and the company said it remains on target to achieve $1 billion in cost savings by 2003.