Industrials
Arconic Earnings Shadowed by Grenfell Tower Disaster
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Arconic Inc. (NYSE: ARNC) reported second-quarter results early Monday morning, the manufacturing firm said adjusted earnings per share (EPS) totaled $0.32 on revenues of $3.26 billion. In the first quarter of this year, the company posted EPS of $0.33 and revenues of $3.23 billion. Analysts had forecast EPS of $0.26 and $3.18 billion of revenues.
Arconic’s stock took a nosedive in late June when the company’s Reynobond PE building product was identified as one of the components in the cladding system at London’s Grenfell Tower. The 22-story public housing building burned on June 14, killing 80 and leaving 79 others injured.
In its earnings report, Arconic tried to separate itself from the disastrous fire:
Our Reynobond products, including Reynobond PE, are permitted to be used in accordance with local codes and regulations in the United States, UK and other countries around the world. Cladding systems contain various components selected and put together by architects, contractors, fabricators and building owners, and those parties are responsible for ensuring that the cladding systems are compliant under the appropriate codes and regulations.
Arconic said that as of June 26 the company no longer sells the product for use in high-rise construction, “regardless of the local codes and regulations.”
The company raised its full-year revenue guidance from a prior range of $11.8 billion to $12.4 billion to a new range of $12.3 billion to $12.7 billion. Adjusted EPS guidance was also raised, from a prior range of $1.10 to $1.20 to a new range of $1.15 to $1.20.
Arconic was separated from Alcoa Inc. in November 2016, when Alcoa changed its name to Arconic and Alcoa Corp. (NYSE: AA) began operating the former company’s bauxite, alumina, aluminum, cast and rolled products and energy businesses. Arconic sold its remaining 19.9% stake in the new Alcoa in May of this year.
The profit and revenue beats combined with the improved guidance did not quell investor concern over the company’s potential liability for the Grenfell Tower fire.
The stock traded down about 0.8% in the early afternoon Monday, at $25.01 in a 52-week range of $16.75 to $30.69. The 12-month consensus price target is $28.40.
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