Aluminum giant Alcoa reported a quarterly loss on Monday steeper than expected in the face of “historic decline” in prices and big restructuring charges, in a bleak opening for the US earnings season.
Alcoa, which last week announced massive job cuts and other cost-cutting moves, said its net loss for the past quarter was US$1.19 billion including hefty reorganization charges.
That amounted to a loss of US$1.49 per share, or US$0.28 per share excluding one-time items, worse than the average Wall Street estimate of a loss of US$0.10 per share on that basis.
Alcoa, which is traditionally the first of the blue-chip companies to report quarterly results, said that revenues fell 18 percent in the quarter to US$5.7 billion.
For all of last year, the Pittsburgh, Pennsylvania, company swung to a loss of US$74 million from a 2007 profit of US$2.56 billion, as revenues fell 8.1 percent to US$26.9 billion.
Alcoa said results “were driven by a 35 percent decline in aluminum prices in the quarter,” including a 56 percent decline from July and a sharp drop in demand from the automotive, commercial transportation, building and construction sectors.
“We are taking wide-ranging measures to address the economic downturn,” said Klaus Kleinfeld, president and chief executive of Alcoa.
“We have streamlined our portfolio to focus on businesses where Alcoa is the recognized leader, curtailed production to adjust to weakened demand, reduced global headcount, and achieved significant savings in key raw materials,” Kleinfeld said.
“By moving quickly to address the market decline, we are using Alcoa’s strategic flexibility and solid liquidity to address the continuing economic uncertainty and emerge even stronger when the economy recovers,” he said.
Alcoa said last week it would slash some 13,500 jobs, or 13 percent, of its global workforce and reduce output to cope with the global economic downturn. Alcoa also said it was implementing a freeze on hiring and salaries.
Some analysts have said financial markets are not prepared for the sharp falloff in corporate results stemming from the global economic crisis.