Alcoa swings to profit on lower expenses : Report

By Kristin Jones
Alcoa Inc. swung to a fourth-quarter profit as the aluminum giant benefited from cost-cutting efforts, though revenue edged down as aluminum prices remained low
The company’s average realized price for aluminum decreased 2.1% from a year earlier, but increased 4.6% from the prior quarter
Shipments of aluminum products were flat from a year earlier and declined 2.8% from the prior quarter
Alcoa’s recent results have been hampered by persistently low aluminum prices — due in part to weak demand in Europe as well as excessive production
As a result, the company has cut production over the past year, while shifting its focus to higher-margin products less vulnerable to slumping metal prices, like bolts and wheels for cars and airplanes
Moody’s Investors Service last month placed Alcoa’s credit rating on watch for a possible downgrade to junk, saying low aluminum prices have hurt the company’s debt-protection measures
The latest period included a gain of $178 million primarily linked to the sale of Tapoco Hydroelectric Project assets
Alcoa, an industrial bellwether that unofficially kicks off the quarterly earnings season in the U.S., posted a profit of $242 million, or 21 cents a share, compared with a year-earlier loss of $191 million, or 18 cents a share
Excluding restructuring charges, discrete tax items and other special items, earnings from continuing operations in the latest period were six cents a share, compared with a loss of three cents a year ago
Revenue edged down 1.5% to $5.9 billion
Analysts surveyed by Thomson Reuters were expecting per-share earnings of six cents on revenue of $5.6 billion
Total costs and expenses fell 12% to $5.5 billion
Looking ahead to the current year, company said it expects global aluminum demand to grow 7% in 2013, compared with 6% in 2012