Robust Aluminum Segment Drives Alcoa's Profit Growth

SEATTLE (Scrap Monster): Alcoa Corporation, a global leader in bauxite, alumina and aluminum products has reported its Third Quarter 2017 Results. Overall, it recorded sequential increase in revenue and earnings, mainly on the back of improved aluminum prices and notable jump in shipments of aluminum and bauxite.

The company’s profits came in lower than expected. The company reported net income of $113 million or $0.60 per share on sales of $3 billion. Excluding special items, the earnings stood at $135 million or $0.72 per share during the quarter. During the same quarter in 2016, Alcoa had posted adjusted earnings of $0.96 per share on revenue of $5.2 billion. Also, the company had reported net income of $75 million or $0.40 per share during the second quarter of the current year. The Q3 2017 revenue, at $3.0 billion was up by 4% sequentially. Alcoa cited improved aluminum pricing, higher aluminum shipments and increased energy sales as the key drivers of revenue during Q3 2017.

Roy Harvey, President and Chief Executive Officer, Alcoa stated that the company continued to benefit from favorable commodity markets. The company, about to complete first year of operations as an independent, publicly-traded company will continue to scale new heights by continuing to execute on three strategic priorities-strengthening of balance sheet, reducing complexities and driving returns.

According to Alcoa, cash from operations during Q3 ’17 totaled $384 million and free cash flow amounted to $288 million. The company used $115 million for financing activities and $100 million for investing activities. This is inclusive of $41 million early loan repayment to Brazil’s National Bank for Economic and Social Development (BNDES). It reported $1.1 billion cash balance and $1.4 billion of debt for the quarter. The net debt of the company as at the end of 3Q stood at $0.3 billion.

The company expects strong global aluminum demand growth to sustain in the near term. It expects the global aluminum market to remain in relative balance for the full year 2017, primarily on account of planned Chinese smelter cuts and ramp up in Chinese aluminum demand. Consequently, it has raised the projection for full-year EBITDA to $2.4 billion as compared with the projection in the range $2.1-$2.2 billion during the previous quarter. Also, global markets for bauxite and alumina are expected to remain in relative balance for the whole year 2017.