Alcoa Warrick Operations employee Fred Westbrook inspects the finished rolls of aluminum as they come off the production line, in a file photo from April 7, 2006, at the Alcoa Warrick Operations in Newburgh, Ind. Alcoa Inc released first-quarter earnings after the closing bell Monday, April 7. - AP
PITTSBURGH (AP):
Aluminum producer Alcoa Inc said on Monday that its first-quarter earnings plummeted 54 per cent, as higher raw material and energy costs and a weaker dollar cut into results.
Net income dropped to US$303 million (€193 million), or 37 cents per share, during the first three months of the year, compared with US$662 million, or 75 cents per share, during the same period last year, the company said.
Sales fell nearly seven per cent to US$7.38 billion (€4.7 billion), from US$7.91 billion a year earlier.
The results failed to meet some Wall Street expectations. Analysts surveyed by Thomson Financial, on average, forecast earnings of 48 cents per share on revenue of US$7.18 billion (€4.58 billion).
"Upstream margins were squeezed by higher energy costs and a weaker US dollar, but the global market remains tight and prices are near historic highs, primarily driven by demand in Asia, especially China," Alcoa Chairman and Chief Executive Alain Belda said in a statement.
Price climbed
The price of aluminum has climbed 24.5 per cent in the past three months as a broad-based global commodity rally lifted most industrial metals.
During the quarter, Alcoa invested in several growth projects, including a new bauxite mine and a refinery in Brazil.
In February, Alcoa and Alu-minum Corporation of China Ltd announced that they were jointly buying 12 per cent of Rio Tinto PLC's shares in a deal reportedly valued at US$14.05 billion (€8.95 billion). Alcoa said it contributed US$1.2 billion (€760 million) to the total investment. The move was widely seen as a strategy to complicate efforts by Australia's BHP Billiton Limited to acquire Rio Tinto.
Also during the quarter, Alcoa completed the sale of its packaging and consumer businesses. It got about US$2.5 billion (€1.59 billion) with the expectation of another US$200 million (€127.45 million) in April.
In March, Alcoa announced the purchase of two aerospace fastener manufacturers, Republic Fastener Manufacturing Corp and Van Petty Manufacturing, from The Wood Family Trust. Financial terms were not disclosed.
Alcoa is the world's third-largest aluminum maker and the first of the Dow Jones industrial average components to report results this quarter.
Shares of Alcoa were up 31 cents in after-hours trading on Monday after falling US$1.56, or 4 per cent, to US$37.44 in the regular session.
