Alcoa Inc. (NYSE: AA), the biggest US aluminum maker, is
scheduled to release financial results for fourth quarter ended December 31 2009
after the market close on Monday, January 11, 2010. Analysts, on average, expect
the company to report earnings of 7 cents a share on revenue of $4.81 billion.
In the year ago quarter, the company reported a loss of 28 cents per share on
revenue of $5.69 billion.
Alcoa Inc., which is considered economic bellwether by many, engages in the
production and management of primary aluminum, fabricated aluminum, and alumina
worldwide. It involves in the technology, mining, refining, smelting,
fabricating, and recycling of aluminum.
Early in October, Alcoa reported that its third quarter profit plunged 71%
from last year, as the global economic downturn depressed demand and prices for
the light metal. However, it marked the company's return to profitability after
three straight quarterly losses. Net income totaled $77 million or $0.08 per
share, compared to $268 million, or $0.33 per share, in the year-ago quarter. On
an adjusted basis, the company earned $39 million or $0.04 per share, beating
analyst expectations. Quarterly revenue fell 34% to $4.62 billion from $6.97
billion in the same quarter last year. Third quarter sales increased 9%
sequentially. Analysts, on average, expected the Pittsburgh, Pennsylvania-based
company to report a loss of $0.09 per share on revenue of $4.55 billion. The
company attributed the sequential improvement to an increase in realized prices
for primary aluminum to $1,972 per metric ton from $1,667 per metric ton in the
second quarter, as well as stabilization in the end markets.
Aluminum prices, which slumped during the early part of the year 2009,
rallied in fourth quarter on government stimulus measures, increasing economic
optimism, and investor appetite for riskier assets. Dollar weakness, recovery in
housing market, stabilization in auto industry, consumer restocking and growing
Chinese demand also supported prices during the quarter. Prices have risen 75%
on the London Metal Exchange from their February 2009 lows of $1,250. Overall,
aluminum prices climbed 48% in the year 2009. In the fourth quarter alone,
prices gained approximately 19%.
In December, Alcoa announced a $10.8 billion joint venture with the Saudi
Arabian mining company Ma'aden. Alcoa, which is investing $900 million over four
years, will own 40% of the project. The venture is expected to produce a
low-cost integrated aluminum complex, including a refinery, smelter and rolling
mill. According to the company, the Saudi joint venture "will become the world's
preeminent and lowest-cost supplier of primary aluminum, alumina and aluminum
products, with access to the growing markets of the Middle East and beyond."
President and CEO Klaus Kleinfeld said the venture amounts to a
"once-in-a-generation opportunity" for the company. No doubt, the project will
give the company the access to the world's biggest proven energy reserves as
well as growing markets in South Asia.
In terms of stock performance, Alcoa shares have gained 43 percent over the
past year.
Disclosure: Author doesn't own any of the stocks discussed here.
