Alcoa Profits from Rising Aluminum Prices

Submitted by Sharemarket News on 12 April, 2011 - 15:25

Aluminum producer, Alcoa Inc (ASX:AAI) pulled profits during the first quarter due to rise in alumina and aluminum prices and improved sales. The largest US aluminum maker reported net earnings for March 31 at $292.26 million compared with last quarter's $244.82 million. Earnings per share were at 28 cents, compared with 27 cents analyst forecast. Last quarter's gross sales grew 5.4 per cent to $5.66 billion compared to $4.64 billion last year.

Although adjusted profit is the biggest since the third quarter of 2008, Alcoa dropped 63 US cents, or 3.5 per cent, to $US17.14 after trading close. Sales increased 22 per cent to $US5.96 billion from last year's $US4.89 billion, missing the average estimate of $US6.06 billion from analysts.

Revenue increase of 45 per cent in food packaging, 37 per cent in commercial transportation, and 26 per cent in building and construction caused the profit surge, along with an expected 12 per cent increase in aluminum demand this year, according to Alcoa Chief Executive Officer Klaus Kleinfeld.

Kleinfeld expects demands from China and the global aerospace industry to increase. "Our outlook for the rest of 2011 and beyond remains very positive due to the world's growing population, increasing urbanisation, and aluminum's advantages as a light, strong and recyclable material,'' Kleinfeld said in a statement.

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