Alcoa’s chief executive, Klaus Kleinfeld, warned of weak economic conditions through the year, particularly in Europe, “as confidence in the global recovery faded.”
That sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing.
The third-quarter profit jumped from a year ago, but was lower than the second quarter and fell short of Wall Street expectations, which had already been lowered because of a slump in global metal prices.
Alcoa’s chief financial officer, Chuck McLane, said in a conference call that worries about Europe’s debt crisis prompted customers there to reduce orders sharply, even into September.
The first Dow component company to report third-quarter results, Alcoa said earnings were $172 million, or 15 cents a share, compared with $61 million, or 6 cents a share, a year earlier.
The company said income from continuing operations was also 15 cents a share, but down from 28 cents a share in the second quarter. Analysts on average were expecting earnings of 22 cents a share, according to Thomson Reuters.
Alcoa said revenue rose 21 percent, to $6.4 billion from a year earlier, but was 3 percent lower than the second quarter of this year as metals prices slumped sharply.
Aluminum prices fell almost 20 percent in the third quarter on global economic concerns, and Alcoa’s share price fell 41 percent during the same period.
Still, aluminum prices could easily rebound if the sentiment about the European economy showed any improvement, analysts said, which would immediately benefit Alcoa.
Article source: http://feeds.nytimes.com/click.phdo?i=1d46e1db4570c87cc14d26232fb12954
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