Arconic, the specialised metals company under siege by activist investor Elliott Management, has reported first-quarter earnings and revenues that are significantly higher than analysts’ expectations, helping support its defence against pressure for an overhaul of its board.
Adjusted earnings per share for the three months to March, excluding one-off items, were 33 cents, up 27 per cent from the equivalent period in 2016. Analysts had on average predicted a small drop in adjusted earnings per share to 24 cents.
Revenues similarly exceeded expectations at $3.2bn, up 4 per cent over the equivalent period of 2016. The consensus forecast was that revenues would be down slightly at just under $3bn.
David Hess, Arconic’s acting chief executive, said in a statement the results had been better than expected because of “solid performance, strong net cost reduction and some additional tailwinds”.
He added that the company was reaffirming the full guidance for 2017 that it provided at its investor day last year, including revenues of $11.8bn-$12.4bn, improved margins and adjusted earnings per share of $1.10-$1.20, up from 98 cents in 2016.
Arconic’s chief executive Klaus Kleinfeld stepped down last week by “mutual agreement” with the board, when directors discovered he had written a personal letter to Paul Singer of Elliott that they considered to show “poor judgment”.
On Monday Arconic said it was willing to select two of the four directors selected by Elliott to its board, to avoid a proxy fight with the activist investor.
Elliott, which controls a 13.2 per cent stake in Arconic, on Tuesday rejected that offer, saying it “offers insufficient change, and offers it only as a distraction as it seeks to buy time and postpone the verdict of shareholders.”
“At this point, given where things stand, we have determined that the only realistic way to produce the kind of change Arconic needs is through the election of all four of the highly qualified Shareholder Nominees to Arconic’s board.”