Monday, July 11, 2011

Alcoa Inc. (NYSE: AA): Q2 2011 Earnings Roundup

Alcoa Inc. (NYSE: AA) reported Monday that its second quarter profit jumped to $322 million, or 28 cents per share, from $136 million, or 13 cents per share, in the year-ago quarter. Revenue totaled $6.6 billion, up 27 percent over second quarter 2010 and 11 percent over first quarter 2011. Analysts, on average, expecte the company to report earnings of 35 cents per share on revenue of $6.32 billion.

"We turned in another strong quarter, with solid revenue and earnings growth," said Alcoa Chairman and CEO Klaus Kleinfeld. "Across the Company, our team is delivering outstanding results through our constant focus on execution and by reinventing what customers believe is possible through innovation. Although the economic recovery is uneven, the overall outlook for Alcoa - and for aluminum - remains positive. Demand for aluminum continues to rise and so does growth in our major markets. These factors support our projection that aluminum demand will grow 12 percent this year and will double by 2020."

Alcoa said that it is also well ahead of the Company's 2011 financial targets. The Company's debt-to-capital ratio at the end of the quarter was 32.6 percent, a 100 basis-point improvement over first quarter 2011. For the first half of 2011, capital spending was $476 million, on track at 32 percent of the 2011 target. Expenditures on the Ma'aden-Alcoa investment were also on track at $152 million, 38 percent of target. Free cash flow was $526 million in second quarter 2011, putting Alcoa on pace through the first half of the year. The Company ended the quarter with cash on hand of $1.3 billion. Days working capital were reduced from 43 in second quarter 2010 to 37 in second quarter 2011.

Looking ahead, Alcoa projects continued growth in all major end markets on a global basis, including aerospace (7 percent), automotive (4-8 percent), commercial transportation (7-12 percent), packaging (2-3 percent), building and construction (1-3 percent), and industrial gas turbines (5-10 percent). For the year, Alcoa projects aluminum demand to grow 12 percent on top of the 13 percent growth seen in 2010. Alcoa projects that, from a 2010 baseline, aluminum demand will double by 2020 on 6.5 percent annual growth.

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