Alcoa Inc., the world’s biggest aluminum producer, said on Monday that third-quarter net income rose slightly, although its operations were hurt by declining aluminum prices and soaring energy and raw material costs.
Net earnings were $289 million or 33 cents per share, compared with $283 million or 32 cents per share in the same quarter last year. Earnings from continuing operations were $290 million or 33 cents per share.
Last month, Alcoa warned that its third-quarter earnings would be as much as 39 percent below Wall Street estimates on lower aluminum prices and higher energy and raw-material costs.
Alcoa also cited weakness in automotive markets and in Europe when it lowered its estimate for earnings per share from continuing operations to 27 cents to 31 cents. Analysts polled by Reuters Estimates reduced their earnings estimates on average to 29 cents per share after the warning, from 44 cents previously.
Alcoa stock was down approximately 6.5 percent during the quarter. By comparison, the Dow Jones Industrial Average, of which Alcoa is a component, was up 2.9 percent in the quarter.
Revenue rose 13 percent to $6.57 billion for the quarter, Alcoa said, but they was down from $6.7 billion in the second quarter, primarily due to lower realized prices for aluminum and alumina --the raw material for aluminum which is smelted from bauxite.
Alcoa also noted that for the year to date its energy and other costs, primarily for raw materials, have increased $578 million. Most of the impact from the Gulf coast hurricanes will be in the fourth quarter, the company said.
“A reduced upstream pricing environment and higher energy costs affected out results this quarter,” said chairman and chief executive officer Alain Belda.
“We have an aggressive productivity program, but it has not offset the impact of escalating costs in energy and raw materials and the speed at which they are flowing through.”
Belda said the company was working to reduce costs and continuing its restructuring campaign.
The sale of railroads serving Alcoa locations resulted in a gain of approximately four cents per share, which was substantially offset by losses stemming from a fire at the company’s Dover, N.J. aerospace castings facility, losses in Russia, the impact of unplanned temporary outages at U.S. facilities, and an increase in the reserve for litigation expenses.
