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Last Update: 10-Oct-12 09:08 ET
Alcoa shares fall 1% despite earnings beat; co lowered FY12 alumina demand growth forecast
Alcoa (AA $9.01 -0.12) reported third quarter earnings of $0.03 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of ($0.00), while revenues fell 9.1% year/year to $5.83 billion versus the $5.57 billion consensus. Alcoa sees global aluminum demand of 6% in 2012 (down from 7%); reaffirms long-term outlook that aluminum demand will double 2010 to 2020. Additionally, Alcoa confirmed it has entered into a settlement agreement with Aluminium Bahrain resolving a civil lawsuit that had been pending in the U.S. District Court for the Western District of Pennsylvania since 2008. Without admitting any liability, Alcoa agreed to make a cash payment to Alba of $85 mln payable in two installments. One half was made at settlement and the other half will be made one year later.
The settlement amount is within the range Alcoa previously estimated as its reasonably possible losses, which it disclosed in its second quarter 2012 earnings announcement. Alcoa said the settlement with Alba represents the best possible outcome and avoids the time and expense of complex litigation. Alcoa continued to turn in strong performance in Q3, despite market turbulence. Amidst challenging market conditions, Alcoa's upstream businesses achieved significant performance improvement in Q3, delivering $98 mln of combined sequential operational improvements across the Alumina and Primary Metals segments as higher volume, improved price and mix, and productivity gains more than offset cost headwinds. In what is traditionally a weaker quarter, Alcoa's midstream and downstream businesses continued to turn in record performance. Global Rolled Products continued to deliver strong profitability despite European weakness, achieving record third quarter ATOI of $98 mln, up 3% sequentially, and 63% YoY.
Adjusted EBITDA per metric ton for Global Rolled Products was a third quarter record at $395, and year-to-date record at $405, 72% higher than the 10-year average. Engineered Products and Solutions achieved a record adjusted EBITDA margin of 20%, a third consecutive quarterly record.
The settlement amount is within the range Alcoa previously estimated as its reasonably possible losses, which it disclosed in its second quarter 2012 earnings announcement. Alcoa said the settlement with Alba represents the best possible outcome and avoids the time and expense of complex litigation. Alcoa continued to turn in strong performance in Q3, despite market turbulence. Amidst challenging market conditions, Alcoa's upstream businesses achieved significant performance improvement in Q3, delivering $98 mln of combined sequential operational improvements across the Alumina and Primary Metals segments as higher volume, improved price and mix, and productivity gains more than offset cost headwinds. In what is traditionally a weaker quarter, Alcoa's midstream and downstream businesses continued to turn in record performance. Global Rolled Products continued to deliver strong profitability despite European weakness, achieving record third quarter ATOI of $98 mln, up 3% sequentially, and 63% YoY.
Adjusted EBITDA per metric ton for Global Rolled Products was a third quarter record at $395, and year-to-date record at $405, 72% higher than the 10-year average. Engineered Products and Solutions achieved a record adjusted EBITDA margin of 20%, a third consecutive quarterly record.
