American aluminium major Alcoa released earnings for the third quarter of 2016 yesterday. The firm turned in a strong quarter and, as its separation into two distinct companies takes effect in less than a month, this is the last full quarter for Alcoa as a single company.
Alcoa’s results reflected a year-on-year profit growth for its Arconic segment, and the new Alcoa’s Alumina and Primary Metals segments continued to be profitable despite low pricing for those materials.
“Alcoa steered steady and showed resilience in spite of near-term market challenges,” said Alcoa’s Chairman and Chief Executive Officer Klaus Kleinfeld. “Profits grew in the combined Arconic segments, and Alcoa Corporation segments managed successfully to stay profitable in a low pricing environment. Productivity across the portfolio was exceptional, and paired with non-essential asset sales, further strengthened our cash position. Arconic’s results underline its strong position in higher margin markets where innovation, technology, process skills and cost focus pay off even under demanding circumstances, whereas Alcoa Corporation proved to be successful in spite of challenging market conditions. The strength of both future companies is the result of our multi-year strategy and allows us to launch two strong, independent entities.”
“Alcoa Corporation segments have met or exceeded their respective 2016 global cost curve goals. The aluminum business now sits at the 38th percentile – from the 51st percentile in 2010, 43rd in 2013 – and the alumina business has moved down to the 17th percentile – from the 30th percentile in 2010, 27th in 2013. The Arconic segments are adjusting their targets to reflect current economic realities in their relevant industries. Looking ahead, fundamentals in key markets remain very solid; commercial aerospace demand is strong with an order book in excess of nine years and the aluminization in automotive continues. We are well positioned to further increase our market position and profitably grow.”
Alcoa’s third-quarter net income was US$166 million, a year-on-year increase over last year’s result of US$109 million. Revenue for the quarter was US$5.2 billion, down slightly year-on-year from last Q3’s revenue of US$5.6 billion.
Going forward, Alcoa sees a 1.6 million metric ton worldwide alumina deficit and a global alumina deficit of 615,000 metric tons in 2016. The firm predicts demand outpacing supply growth, with the former increasing by 5% to the latter’s 3% increase.