On a GAAP basis, Alcoa posted a net loss of $0.11 per share, which the company attributed mainly an 8% price drop for aluminum at the London Metals Exchange. The company also recorded a charge of $42 million related to closing two production lines in Canada, a $34 million charge for closing a smelter in Italy, and a $37 million restructuring charge.
Alcoa reiterated its projection for global aluminum demand growth of 7% in 2013 and its expectation that aluminum markets will be in balance for the year. The company said that in the first half of the year it has achieved $539 million in productivity savings against a full-year target of $750 million.
The company’s CEO said:
Our businesses showed remarkable operating performance in the quarter with solid free cash flow. In our value-add businesses we reached another milestone with record profitability in our downstream business while acting decisively to defy the headwinds of falling metal prices in our upstream businesses. We improved our competitive position by actively restructuring, curtailing, and closing facilities and made progress addressing legacy legal issues.
Alcoa’s adjusted EPS beat the consensus estimate by a penny, while revenues were just a shade light. But cutting production and firing staff is not a recipe for growth, and that’s the recipe that the company plans to follow for the next couple of quarters at least. Last week’s closure of Alcoa’s Fucina smelter in Italy looks like it might have been timed to juice the company’s results just enough to meet the consensus EPS estimate.
Shares are up 1.3% in after-hours trading, at $8.02 in a 52-week range of $7.63 to $9.93. Thomson Reuters had a consensus analyst price target of around $8.90 before today’s results were announced.
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