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Alcoa Reports Second Quarter 2010 Results

Tuesday, July 13th, 2010

Alcoa (NYSE: AA) announce second quarter 2010 income from continuing operations of $137 million or $0.13 per share compared with a first quarter 2010 loss from continuing operations of $194 million, or a loss of $0.19 per share. First quarter 2010 results included restructuring and special charges of $295 million, or $0.29 per share. The second quarter of 2009 showed a loss from continuing operations of $312 million, or $0.32 per share including restructuring charges.
Earnings for the second quarter improved $331 million sequentially as stronger volumes, productivity improvements, favorable currency and lower energy costs more than offset slightly lower average realized metal prices which declined $22 a metric ton, to an average of $2,309 a ton in the quarter.
The second quarter 2010 results reflect the impact of restructuring including job reductions and special items such as costs associated with the recently completed United Steelworkers contract negotiations, offset by non-cash, mark-to-market benefits on derivatives in several power contracts as well as a net discrete tax benefit. Taken together these items had a net unfavorable impact of $2 million in the quarter. First quarter 2010 results included restructuring and special charges of $295 million or $0.29 per share.
Revenues for the quarter were $5.2 billion, a six percent increase from the first quarter of 2010 driven by a four percent increase in aluminum shipments and a one percent increase in third-party prices for alumina, partially offset by a one percent decrease in realized prices for aluminum. In many markets we saw strong revenue growth from the previous quarter with packaging (+17%), commercial transportation (+10%), building and construction (+9%), distribution (+5%), industrial gas turbines (+5%) and aerospace (+5%) realizing gains. Revenues increased 22 percent from $4.2 billion in the second quarter of 2009.
“We improved profits and revenues and maintained our solid cash position,” said Klaus Kleinfeld, Alcoa Chairman and CEO. “The top and bottom line growth was driven by higher volumes from stronger end markets and continued gains from our productivity programs. Based on this improved end-market demand, we are raising our projection for aluminum consumption from 10 percent to 12 percent this year.
“Prospects for Alcoa and aluminum continue to be excellent,” Kleinfeld said. “Aluminum is traditionally a backbone of growing economies and is penetrating new applications every day. Alcoa has enviable positions in bauxite, alumina and aluminum and our investments will move us further down the cost curve. Meanwhile, our mid- and downstream businesses continue to improve margins.”
Highlights:
– Income from continuing operations of $137 million or $0.13 per share; net income of $136 million or $0.13 per share.
– Revenue of $5.2 billion, a six percent increase from the first quarter of 2010, primarily driven by higher volume.
– EBITDA of $724 million — EBITDA Margin of 14.0 percent highest since third quarter 2008.
– Free cash flow in the second quarter totaled $87 million.
– Cash on hand of $1.34 billion.
– Global aluminum consumption forecast raised from 10 to 12 percent on improved end-market demand.
(Ref 1456)

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