Alcoa Earnings Rebound as Aluminum Use Rises in Autos
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Alcoa Inc. (AA), the largest U.S. aluminum producer, reported its highest earnings in three years after prices rebounded and demand increased from car, truck and plane makers.
Profit excluding one-time items was 31 cents, the New York-based company said yesterday, surpassing the 22-cent average of 17 estimates compiled by Bloomberg.
Alcoa’s improved performance in 2014 follows a period of depressed earnings as prices slumped. Chairman and Chief Executive Officer Klaus Kleinfeld has increased its focus on higher-margin aluminum products and rationalized the traditional smelting business.
Third-quarter net income rose to $149 million, up sixfold from a year earlier. Sales increased 8.2 percent to $6.24 billion, beating the $5.84 billion average estimate.
After-tax operating profit rose to a record at Alcoa’s engineered products and solutions unit and gained 45 percent in the rolled-aluminum segment.
Alcoa is benefiting from higher commercial-jet orders and a shift to aluminum components instead of steel among automakers such as Ford Motor Co., which plans to make its F-150 pickup truck with aluminum body panels.
“Auto body sheet has a much higher margin than anything except aircraft,” Northcoast’s O’Carroll said. “I think 2015 is going to get a pretty big lift of usage on the F-150 and of course all of the margin benefit of that.”
Source: businessweek- Alcoa Earnings Rebound as Aluminum Use Rises in Autos