Interesting?Alcoa loss not as bad as expectedJay Miller | July...

Interesting?

Alcoa loss not as bad as expected

Jay Miller | July 09, 2009
Article from: Dow Jones Newswires

ALCOA swung to a second-quarter loss as falling aluminium prices and volume again led to a big drop in revenue
But the company did record some improvement sequentially and topped Wall Street expectations.
"Our cash-generation initiatives, productivity improvements, and portfolio changes are working," said chief executive Klaus Kleinfeld, adding that the company's cost base has been reduced to withstand "the most serious downturn in the history of the aluminium industry".

In after-hours trading, Alcoa shares rose 7 per cent to $US10.12 after resuming trading. The shares have doubled in value in the past four months but remain off nearly 75 per cent from a year ago.

The aluminium giant, which kicks off the US earnings season, is banking on a recovery, having just completed a $US750 million ($964m) expansion of a factory in Russia.

Mr Kleinfeld said in Russia yesterday he was seeing signs of a recovery or bottoming out in some sectors, including aluminium, as the US automobile market reawakened and China's growth picked up. However, cutting costs remained a top priority.

Alcoa reported a loss of $US454 million, or US47 cents a share, compared with earnings of $US546 million, or US66c a share, a year earlier.

The loss from continuing operations was US26c a share, excluding a restructuring charge, compared with year-ago income of US66c. The comparable loss was US59c in the first quarter.

Sales slumped 41 per cent to $US4.24 billion, as shipments fell 8.5 per cent and the average price of aluminium fell 49 per cent on the London Metal Exchange. However, sales were up 2.3 per cent from the first quarter.

Analysts polled by Thomson Reuters expected a loss of US38c a share on revenue of $US3.93bn.
The company said it achieved $US1bn in procurement savings through the first half of the year, about two-thirds of the year target. Overhead savings year-to-date are about $US270m, already 34 per cent above the target.