Alcoa Corp. projected a fourth-quarter decline in its aluminum business amid rising costs, overshadowing better-than-expected earnings.
The company expects a sequential decline in its aluminum segment, with anticipated higher power costs in Europe, a full quarter of Section 232 tariffs, and higher maintenance and seasonal labor costs, partially offset by the positive impact of its Intalco curtailment for a full quarter, according to a statement Wednesday.
- The biggest U.S. aluminum maker posted an adjusted loss US$1.17 a share, compared with the US$1.40 loss average of analysts’ estimates compiled by Bloomberg. The loss was the widest since a split from its jet- and car-parts business in 2016.
- Earnings before interest, taxes, depreciation, and amortization were US$284 million, Alcoa said in a statement Wednesday. That compares with the US$219.3 million average estimate.
- Benchmark aluminum prices rose the past two quarters, including a 9 per cent gain in the three months ended in September. The metal had fallen to a four-year low in April as the coronavirus pandemic ravaged demand from automakers and other customers.
- The report comes six months after Alcoa suspended its global market forecast because of uncertainty stemming from the coronavirus. In January, Alcoa had projected that global supply would exceed demand by as much as 1 million tons this year.
- Alcoa has been taking steps to reduce costs as it tries to tackle the fallout from the coronavirus crisis. Those measures included shutting production capacity at one of its U.S. plants and reducing US$100 million in capital expenditures. This month, Alcoa said it plans to curtail its San Ciprián aluminum smelter in Spain.
- Alcoa shares rose 3.5 per cent in the third quarter. The producer is still trying to recover from a first-quarter plunge that came amid pandemic shutdowns, with the stock down about 46 per cent in the first nine months of this year.
The earnings statement was released after the close of regular trading in New York, where Alcoa slipped 2.3 per cent at 4:40 p.m.