Wed, Jan 11, 2012 - Page 10 News List

Alcoa posts Q4 loss on weak demand for aluminum

CAUTIOUS:The manufacturing giant’s CEO expected supply cutbacks to bolster prices this year, but warned that high raw material costs would weigh on earnings


Alcoa Inc on Monday started off the earnings season by posting its first net loss in more than a year.

The New York manufacturing giant’s profits dwindled in the fourth quarter with fewer orders for its products as uncertainty grew about the impact of Europe’s debt crisis on the global economy. It was also affected by a slowdown in manufacturing activity in China.

Aluminum prices dropped about 12 percent in the fourth quarter. Prices have fallen more than 27 percent from their peak in April.

Alcoa said that its net loss was US$191 million, or US$0.18 a share, in the October-to-December quarter. That compares with income of US$258 million, or US$0.24 a share, a year ago. It marked the company’s first net loss since the first quarter of 2010.

Revenue rose to US$6 billion from US$5.65 billion, although business was down in most areas; including construction, industrial products, packaging and commercial transportation. Sales to automobile manufacturers fell 2 percent.

Alcoa had record higher revenue from its aerospace and industrial gas turbine businesses.

For all of last year, Alcoa reported net income of US$611 million, or US$0.55 a share, compared with US$254 million, or US$0.24 per share, in 2010. Revenue rose to US$25 billion from US$21 billion.

For this year, Alcoa chief executive Klaus Kleinfeld predicted that cutbacks in aluminum production would create a global deficit in aluminum supplies of about 600,000 tonnes. He also forecast that global aluminum demand would increase 7 percent this year.

In the coming year the company expects European sales would remain weak and that high costs for energy and raw materials would continue to drag on earnings. Global aerospace and automotive demand for aluminum is seen staying strong.

While European markets may be weak, Alcoa sees improving demand this year in China, especially for beverage can packaging, automotive and commercial vehicles, and construction.

Alcoa was the first company listed in the Dow Jones Industrial Average to report fourth-quarter results.

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