Alcoa’s 3Q performance misses expectations
Staff, wire reports
WEATHERSFIELD — Alcoa, which is posting its last quarterly earnings report before its split, announced softer-than-expected third-quarter results, stung partly by lower alumina prices.
The New York-based metals maker, with local operations in Weathersfield, also lowered revenue forecasts for some segments of Arconic, which will become the new company.
Shares slid almost 11 percent in afternoon trading Tuesday.
Alcoa Inc. has been on a long quest to shrink its aluminum-smelting business, which has been hurt by stubbornly low prices. The company is splitting that segment off and creating a new public company to make and sell specialty lightweight products for aerospace, autos and other industries. Alcoa said Tuesday that the separation is set to take effect before the market open on Nov. 1.
Alcoa Corp. will concentrate on serving the North American packaging market by focusing on upstream products, including aluminum. The second company, Arconic Inc., will focus on engineered products for its automotive and aerospace segments.
Alcoa’s local plant in Weathersfield, formerly RTI, will become part of Arconic Inc. Operations there are expected to continue as they have been.
For the period ended Sept. 30, the company earned $166 million, or 33 cents per share. A year earlier Alcoa earned $44 million, or 6 cents per share.
Stripping out certain items, earnings were 32 cents per share. That’s a penny below what analysts polled by FactSet were looking for.
Revenue dropped to $5.21 billion from $5.57 billion, as shipments of aluminum products declined. Analysts were calling for revenue of $5.33 billion, according to a FactSet survey.
Alcoa’s results are watched closely as a barometer of the economy because its products are used in so many industries.
Alcoa said that it now foresees full-year revenue in a range of $4.8 billion to $5 billion for Global Rolled Products. That’s down from its prior guidance of $5 billion to $5.2 billion.
For Engineered Products and Solutions, Alcoa now anticipates full-year revenue between $5.6 billion and $5.8 billion. Its previous outlook was for $5.9 billion to $6.1 billion in revenue.
The company now expects $1.7 billion to $1.8 billion in revenue for the year for Transportation and Construction Solutions. It previously predicted $2.1 billion in revenue. The segments are all part of Arconic.
Shares of Alcoa fell $3.37, or 10.7 percent, to $28.14 in afternoon trading Tuesday. Its shares are down more than 8 percent over the past year.