Alcoa Inc. (NYSE: AA) has kicked off earnings season.  Expectations were not very high about the fourth quarter and expecting any great guidance seemed a bit misplaced if you have watched the news flow of late.  Still, Alcoa is the first of the 30 DJIA components to kick off earnings season for the fourth quarter reports of 2011.

The aluminum giant reported earnings of -$0.03 EPS and $5.99 billion in revenues.  Thomson Reuters had a consensus grouping of -$0.02 EPS and $5.74 in revenues.  Keep in mind that it was just a week ago that analysts were looking for $0.03 EPS and less than 3 months ago estimates were up around $0.20 EPS or so.

The loss was $199 million for the fourth quarter and if you include items the loss came in at -$0.18 EPS.  The company blamed “restructuring charges associated with the closure and curtailment of high-cost production capacity, lower aluminum prices, and continued market weakness.”

Alcoa had already been talking down its expectations when it was talking about capacity shutdowns.

As you would expect, The company is forecasting for 2012 global aluminum demand will grow 7% and it expects a global deficit in primary aluminum supply.  That is above the 6.5% projection per year that Alcoa has said is required for the aluminum market doubling in size by 2020. It sees 600,000 metric tonnes as the deficit for the industry in 2012. Global industrial use/growth is projected by Alcoa as follows:

• aerospace (10-11 percent),
• automotive (3-8 percent),
• commercial transportation (2-5 percent),
• packaging (2-3 percent),
• and building and construction (4-5 percent) markets.

Alcoa shares closed up 2.9% at $9.43 on the day and the 52-week trading range is $8.45 to $18.47.  Today’s news could have been worse and the stock was already very week ahead of earnings. Shares were above $11 on October 31, 2011.  Shares may trade lower on this news, but that is proof that the market’s ability to price in the known events is dead.  So much for the efficient market theory you learned about in college.

Read Also: Stocks Priced for 12% Gain to DJIA 13,678

JON C. OGG

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