Alcoa (AA 30.00, +1.02, +3.52%) reported fourth quarter earnings of $0.66
per share after the close yesterday, excluding non-recurring items, which
easily came in ahead of expectations.
On the top line, revenues rose 5.4% year/year to $3.34 bln, which was just slightly ahead of expectations. Revenue decreased slightly sequentially.
Moving further down the income statement, adjusted EBITDA of $749 mln in the quarter, easily topping expectations, fell 5.9% year/year and also came in short of last quarter’s $795 mln mark. The company’s outperformance was largely driven by better margins in its aluminum segment due to lower-than-expected production costs.
The sequential decline in EBITDA resulted primarily from lower aluminum prices and a decrease in the price of energy sales in Brazil, partially offset by increased shipments across all three segments. Separately, the company reported $535 mln of cash from operations and $387 mln of free cash flow.
The company had a strong quarter, despite sequentially weaker commodity prices, with higher profits in the Bauxite and Alumina segments.
Overall, the company said, "With the help of higher market prices earlier in the year, we increased annual profits, addressed liabilities, significantly strengthened our balance sheet, and began returning cash to stockholders."
Looking ahead, Alcoa is projecting a deficit in the global aluminum market in 2019 in a range of 1.7-2.1 mln metric tons with global demand growth of 3-4%. However, in the Alumina market, the company expects to see a shift from deficit to surplus, projecting a surplus between 0.2-1.0 mln metric tons. Alcoa notes that the surplus is driven by China owing to the country’s refining expansions. The bauxite market is also expected to see a surplus in 2019 with continued global stockpile growth, also driven by China.
Shipment projection: The company expects to see total bauxite shipment fall into the range of 47.0-48.0 mln dry metric tons, total alumina shipments of 13.6-13.7 mln metric tons, and aluminum in the range of 2.8-2.9 mln metric tons.
Near midday, AA is trading about 3.5% higher.