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Alcoa records US$454m loss in Q2
By Daniel Lovering |
July 10, 2009, Friday
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Print Edition
Print Edition
IN an unofficial opening to the earnings season, Alcoa Inc reported another quarterly loss but beat Wall Street expectations and said some markets for the metal may be stabilizing.
The aluminum giant's second-quarter loss of US$454 million was narrower than analysts expected, and company executives attributed that outcome to recent efforts to slash costs and raise cash. They said some aluminum markets showed signs of improvement, but reiterated a forecast that worldwide aluminum consumption will shrink 7 percent this year amid the global recession.
It was the company's third straight quarterly loss with fresh evidence of slumping orders from key customers in the aerospace, automotive, commercial transportation and construction industries. Alcoa and other aluminum makers have struggled since last year with sharply lower orders for the metal used in products ranging from beer cans to jumbo jets.
Anemic demand has driven up stockpiles and depressed prices of the metal, and many aluminum makers have responded by curbing production. Analysts say demand is picking up, but excess supplies will keep prices relatively low in the months ahead.
Alcoa, the first of the Dow Jones Industrial Average companies to post results and a bellwether of industrial health, has scaled back its production by about 20 percent. It has undertaken a campaign to cut costs and raise cash, announcing 13,500 job cuts and the planned sale of four business units earlier this year.
In April, Alcoa said it had agreed to sell one of its businesses, which makes electrical systems for automobiles, to Platinum Equity, a Los Angeles-based private equity firm, for an undisclosed amount.
Alcoa's President and CEO, Klaus Kleinfeld, said the company's efforts to cut costs and generate cash "are working."
"Now Alcoa has the staying power and reduced cost base to withstand the most serious downturn in the history of the aluminum industry," he said in a statement.
Kleinfeld said Alcoa was well-positioned to grow as the broader economy recovers, and that some end markets - such as the United States beverage can and auto markets - showed signs of stabilizing. But Alcoa expects further weakness in the aerospace industry, with a 6 percent decline in deliveries of large aircraft.
The aluminum giant's second-quarter loss of US$454 million was narrower than analysts expected, and company executives attributed that outcome to recent efforts to slash costs and raise cash. They said some aluminum markets showed signs of improvement, but reiterated a forecast that worldwide aluminum consumption will shrink 7 percent this year amid the global recession.
It was the company's third straight quarterly loss with fresh evidence of slumping orders from key customers in the aerospace, automotive, commercial transportation and construction industries. Alcoa and other aluminum makers have struggled since last year with sharply lower orders for the metal used in products ranging from beer cans to jumbo jets.
Anemic demand has driven up stockpiles and depressed prices of the metal, and many aluminum makers have responded by curbing production. Analysts say demand is picking up, but excess supplies will keep prices relatively low in the months ahead.
Alcoa, the first of the Dow Jones Industrial Average companies to post results and a bellwether of industrial health, has scaled back its production by about 20 percent. It has undertaken a campaign to cut costs and raise cash, announcing 13,500 job cuts and the planned sale of four business units earlier this year.
In April, Alcoa said it had agreed to sell one of its businesses, which makes electrical systems for automobiles, to Platinum Equity, a Los Angeles-based private equity firm, for an undisclosed amount.
Alcoa's President and CEO, Klaus Kleinfeld, said the company's efforts to cut costs and generate cash "are working."
"Now Alcoa has the staying power and reduced cost base to withstand the most serious downturn in the history of the aluminum industry," he said in a statement.
Kleinfeld said Alcoa was well-positioned to grow as the broader economy recovers, and that some end markets - such as the United States beverage can and auto markets - showed signs of stabilizing. But Alcoa expects further weakness in the aerospace industry, with a 6 percent decline in deliveries of large aircraft.
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