Alcoa BEATS Earnings Estimates, Stock Surges After Hours

Alcoa aluminium Factory Machine

Photo: Sean Gallup/Getty Images

UPDATE:Alcoa reported first quarter results that topped expectations on both the top and bottom lines as revenue surged to a record high, the company said this afternoon.

Demand for aluminium blew past expectations as the auto and air industries continued to rebound. 

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Net income sharply beat estimates at $105 million, or $0.10 per share, when excluding one time charges. Wall Street had expected the metals firm to announce a loss of $0.04 per share.

Revenue also topped expectations, up nine per cent year-on-year to $6.0 billion even as realised aluminium prices declined.

“Performance rebounded strongly this quarter due to our proactive cash sustainability actions, our relentless focus on profitable growth, and stabilizing markets,” Alcoa CEO Klaus Kleinfeld said.

Growth at the company was driven by a surge in its Engineered Products and Solutions unit, which jumped 11 per cent. Process improvements contributed to that gain, and Alcoa expected to see further market share gains in the second quarter.

The company reaffirmed its demand projections for 2012, seeing aluminium growth of 7 per cent, even as it said growth in the aerospace industry would outpace previous estimates.

Continued demand will mostly flow from China, where it sees consumption gaining 11 per cent in 2012 after a 15 per cent increase in 2011. Alcoa projects mid-single digit consumption growth in both Russia and Brazil, while Europe contracts 0.3 per cent.

Shares have rallied nearly 5 per cent on the upbeat report, trading at $9.75 per share after hours.

However the Dow component still has to overcome a difficult market, which forced it to cut capacity across its aluminium supply chain after intense competition from manufacturers in China pressured margins.

Earlier this year the company said it would lower smelting capacity by 12 per cent, including plant closures in Tennessee and Texas.

Alcoa’s announcement this afternoon kicks off the first earnings quarter of 2012. Already, many February reporters have topped estimates. 

“Of the 28 companies with February quarter-end that have reported results thus far, 68 per cent beat on EPS, 82 per cent beat on sales and 57 per cent beat on both,” Dan Suzuki, an analyst at Bank of America, said. “This includes beats from companies across a broad range of industries, such as Autos (AZO), Retail (BBBY), Tech (ORCL), and Financials (DFS).”

Click here to see the 18 companies that Bank of America analysts believe will beat expectations this quarter >

ORIGINAL (3:51 p.m. EST):

Global aluminium giant Alcoa will report first quarter results just minutes after the opening bell, kicking off earnings season.

The metals firm is expected to post a $0.04 loss on $5.77 billion in sales.

Earlier this year, Alcoa cut capacity across its aluminium supply chain after intense competition from manufacturers in China pressured margins.

The company said it would decrease smelting capacity by 12 per cent when it made the announcement and close plants. 

The news followed a relatively disappointing quarter, when Alcoa saw revenue surge above Wall Street estimates to $6.42 billion, but income from operations missed. 

Alcoa’s report also kicks off the unofficial earnings season, which heats up this Friday with numbers from J.P. Morgan and Wells Fargo. 

A bottom’s up estimate at Bank of America Merrill Lynch showed that if current estimates for the S&P 500 come to pass, it would represent sales growth of four per cent and earnings appreciation of three per cent.

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