Alcoa Second Quarter Earnings Fall Short; Reaffirms Global Aluminum Demand Projections

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Last Update: 12-Jul-11 09:56 ET

Alcoa (AA $15.84 -0.07) reported second quarter earnings of $0.32 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.33.

Revenues rose 27.0% year/year to $6.59 billion versus the $6.34 billion consensus.

The sequential increase in income from continuing operations was driven by higher quarterly revenue (up 11%), higher alumina shipments (up 8%), and higher realized pricing for both alumina (up 7%) and aluminum (up 6%), along with improved productivity and continued strong growth in major markets served by mid- and down-stream businesses. This was somewhat offset by a weaker U.S. dollar, along with higher energy and materials costs.

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