Alcoa Kicks Off Earnings Season With A Bang -- Sees Strong Demand And Strong Pricing

Everyone gets nervous ahead of Alcoa earnings because they tend to be pretty volatile, and the company has a tendency to come in weak.

But at least this quarter they were fine.

The company’s $5.2 billion in Q3 revenue was better than expectations, and $.09 EPS surpassed estimates of $.06.

See our preview here for background.

Here’s the key commentary:

The third quarter 2010 results also reflect the impact of special items such as previously announced recovery costs associated with the São Luís alumina refinery; a negative impact from the second quarter flood at the Avilés smelter in Spain; costs associated with the recent debt tender offer; non-cash, mark-to-market impacts of derivatives in several power contracts; and restructuring activities. These items were partially offset by a discrete income tax benefit.

“We enhanced our liquidity, improved our balance sheet, and saw strong performance in our mid and downstream businesses,” said Klaus Kleinfeld, Alcoa Chairman and CEO. “And despite unfavorable currency shifts and slightly lower metal prices, our upstream businesses continue to make progress.

“We see markets strengthening and have increased our 2010 global aluminium consumption forecast to 13 per cent from 12 per cent. In countries such as China, Brazil, India, and Russia, more and more people are moving into the middle class, driving demand in building and construction, transportation, and packaging. This trend favours aluminium as it is light, strong, and infinitely recyclable.”

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