Crucible of molten aluminium at Alcoa's production plant in Goose Creek, South Carolina
Crucible of molten aluminium at Alcoa's production plant in Goose Creek, South Carolina

Alcoa’s first-quarter net income rose 59 per cent to $149m as the aluminium group outperformed market expectations thanks to strong demand from users for its aerospace and automotive products.

The group nevertheless maintained its forecast for growth in world aluminium demand at 7 per cent. Its shares dipped 1.31 per cent in after-market trading to $8.28.

Alcoa is frequently seen as a bellwether for US industrial demand but has suffered in recent years from a worldwide excess in aluminium production, which has at times pushed after-tax operating income (ATOI) at its upstream alumina operations into loss.

Overall, revenue fell 2.9 per cent to $5.83bn from last year’s first quarter. Alcoa reported earnings per share up 44 per cent to 13 cents, against market expectations of 8 cents.

Excluding the effect of special items, net income would have risen 15 per cent to $121m. The special items included an income tax credit, mark-to-market gains on some energy contracts, and insurance payments after a fire, but were offset by restructuring costs.

William Oplinger, chief financial officer, said the group had delivered “solid first-quarter results” across all its business segments.

ATOI in engineered products and solutions – which makes components for the aerospace and automotive industries – rose 10 per cent over last year’s first quarter to $173m, on third-party sales up 2.4 per cent to $1.42bn.

Third-party sales figures exclude the substantial sales between Alcoa’s different segments.

In global rolled products, ATOI fell 21 per cent to $81m, on third-party sales down 3.6 per cent to $1.78bn.

The two upstream businesses remained “strongly profitable”, Mr Oplinger said. They had benefited from strong demand in the automotive and aerospace industries but suffered from low international aluminium prices.

The group forecast that aerospace demand would grow 9 to 10 per cent this year, while automotive demand would grow between 1 and 4 per cent.

ATOI in the core alumina business rose 65 per cent to $58m on third-party sales up 6.6 per cent to $826m. Alcoa attributed the improvement to better aluminium prices on the London Metal Exchange.

In primary metals, ATOI rose from $10m to $39m, on third-party sales down 9.6 per cent to $1.76bn. The company attributed the improvement to better efficiency.

Despite the continuing excess of worldwide aluminium production, Alcoa sharply cut its forecast for annual excess over demand from 535,000 metric tonnes in the fourth quarter to 155,000 metric tonnes this quarter. The reduction is a result of scaling back production.

“We see a slightly tighter market as supply contracts,” Mr Oplinger said.

Get alerts on Alcoa Inc when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article