Peak Alumina Prices Drive Alcoa’s Third Quarter Profits

SEATTLE (Scrap Monster): The supply disruptions on account of strike at Australian operations, U.S. sanctions on Rusal and lower production at Alunorte, Brazil aluminum refinery resulted in tremendous jump in alumina prices during 2018. The peak alumina prices helped Alcoa boost its profits during the third quarter of the year. Along with results, the company also announced $200 million stock repurchase program.

The company’s earnings came in at $0.63 per share on revenue of $3.39 billion. The adjusted earnings before EBITDA excluding special items totaled $795 million. The cash from operations was $288 million and free cash flow was $206 million. The company ended the quarter with cash on hand of $1.0 billion and debt of $1.8 billion.

Alcoa hiked the full-year guidance on adjusted EBITDA from its prior guidance of $3.0 billion-$3.2 billion to $3.1 billion-$3.2 billion. The company remained with its guidance forecasting full-year global deficit for both aluminum and alumina and a surplus for bauxite in 2018. The aluminum deficit is likely to range between 1.0 million metric tons and 1.4 million metric tons. The demand growth forecast has been downgraded to 3.75%-4.75%. The global alumina deficit is projected between 400,000 metric tons and 1.2 million metric tons.

Alcoa hinted at reorganizing its Spanish operations by ceasing production at the least productive Avilés and La Coruña facilities and concentrating solely in San Ciprián, which produces both aluminum and alumina. The company will initiate a formal consultation process to this effect.