Wednesday, April 11, 2012

Alcoa Inc (NYSE: AA)

Alcoa, the manufacturer of aluminum products, is the first company in the Dow to announce quarterly results. Late Tuesday, Alcoa announced net income of $94 million for Q1-2012, or 9 cents per share, which is actually down 69% from Q1-2011; but it is up from the $-191 million incurred from Q4-2011. More importantly, the results were ahead of analysts' estimates of 4-cent loss per share. As of now, shares of Alcoa have climbed 7.74% to 10.04. Also notable is the climb in most of the US and European stock indexes. The S&P 500 finally stopped a five-day slide, triggered by lackluster March job reports and high borrowing costs in Spain and Italy, that saw its index fall 4.3%.

During the first quarter this year, Alcoa announced the closure of  plants in the United States, Spain, and Italy, cutting over 500,000 tons of aluminum capacity. This cutback came after aluminum prices are down 23% on the London Metal Exchange in the past 12 months, averaging $2,219 a ton. Meanwhile, Alcoa is engaging in billion-dollar venture in Saudi Arabia, which it says will be the "world’s most efficient integrated aluminum production plant." Finally, Alcoa is boosting 2012 aerospace sales forecast by 3 percentage points, and projecting that the US automobile sales will grow 7 to 12%. Its view on the global market also remains optimistic, as it "reaffirms global aluminum demand growth projection of 7% and a global aluminum supply deficit."

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