Alumina and Rolled Products Buoy Alcoa’s Fourth-Quarter Results

Alumina and Rolled Products Buoy Alcoa’s Fourth-Quarter Results

Alcoa Corporation released fourth-quarter results yesterday. Although earnings missed estimates for the quarter, the firm still turned in strong results to end 2016.

For the quarter ending December 31, Alcoa reported a net loss of US$125 million. The firm chalks up the loss to measures taken to streamline the portfolio. When special items are taken out, the adjusted net income returns to the black to the tune of US$26 million. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), aside from special items, came in at US$335 million.

Higher alumina prices and a higher volume of sales in the rolled products portion of the company boosted revenue by nine percent quarter-on-quarter for a total of US$2.5 billion. Alcoa’s cash balance of US$853 million and an overall debt of US$1.4 billion translates to an overall net debt of US$600 million as of the last day of 2016.

Major events impacting the company in the just-ended quarter include Alcoa World Alumina and Chemicals (AWAC)’s finalizing of its first major bauxite export contract from assets in the state of Western Australia, and the permanent closure of Surname’s Suralco bauxite mines and alumina refinery.

“Alcoa’s first reporting period as a new, standalone, publicly-traded company points to our ability to deliver shareholder value,” said Alcoa’s Chief Executive Officer Roy Harvey. “Rising alumina and aluminum prices improved the bottom line, our alumina segment had exceptional profit growth in a stronger market environment and doubled margins, while our bauxite business also increased profits and reported robust margins. In addition, we continued to streamline our portfolio and generated cash to strengthen the balance sheet.”

“We’ve entered 2017 focused on our strategic priorities,” he went on. “We will reduce complexity and costs across Alcoa, remain disciplined with cash, and focus on smart investments with strong returns.”

As to the present year, Alcoa forecasts a balanced global market for bauxite and alumina as well as a global surplus of between 400 thousand and 800 thousand metric tons. The firm projects a growth in aluminium demand of four percent over last year’s levels.