Wednesday, October 5, 2011

Alcoa Inc. (NYSE: AA): Q3 Earnings Preview 2011

Alcoa Inc. (NYSE: AA) is scheduled to release its third quarter earnings after the closing bell on Tuesday, October 11, 2011. Analysts, on average, expect the company to report earnings of 27 cents per share on revenue of $6.39 billion. In the year ago quarter, the company reported earnings of 9 cents per share on revenue of $5.29 billion.

Alcoa Inc. engages in the production and management of primary aluminum, fabricated aluminum, and alumina worldwide. The Company’s products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense, and industrial applications.

In the preceding second quarter, the Pittsburgh, Pennsylvania-based company's net income was $322 million, or 28 cents per share, compared to $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, expected the company to report earnings of 35 cents per share on revenue of $6.32 billion.

At its last earnings call in July, the company said that it was well ahead of its 2011 financial targets. Alcoa projected continued growth in all major end markets on a global basis. Alcoa also reaffirmed its 2011 global aluminum demand forecast of a 12% growth. "Although the economic recovery is uneven, the overall outlook for Alcoa - and for aluminum - remains positive," said Chief Executive Officer Klaus Kleinfeld. "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."

Demand for aluminum is on the rise, driven by the push by automotive and aerospace companies to create lighter and more fuel efficient vehicles and also the light metal being used broadly in electronic products. Aluminum producers see emerging markets such as China, Brazil and Russia as a huge source of revenue as their economies continue to expand.

Recently, Alcoa announced plans to accelerate growth in its midstream Global Rolled Products businesses by shifting away from a regional, asset-based structure to a market-based structure, effective immediately. The company will focus on five key global markets, with particular emphasis on emerging economies.

Last month, the company announced that it will expand its Davenport, Iowa rolled products plant to meet rising demand from the automotive market. The expansion is expected to be completed by the end of 2013. Also, Alcoa signed a Letter of Intent with the China Power Investment Corporation (CPI) to form Joint Venture, which will focus on producing high-end fabricated aluminum products in China. Further terms of the joint venture were not disclosed.

Full Disclosure: None.
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