The first Dow component company to report its Q3 saw earnings rise 42% to 42 cents a share (all figures in U.S. dollars). This is down from the original earnings forecast of 49 cents that was trimmed back by analysts after the profit warning on Sept. 18.
Alcoa's earnings have been boosted by cost cutting, higher aluminum prices and contributions from acquisitions this year of Reynolds Metals Co. and Cordant Technologies. But profit growth has still suffered from higher energy costs and a softening of demand in major industrial markets.
Pittsburgh-based Alcoa earned $368 million in the quarter ended Sept. 30, up from $259 million, or 35 cents a share, a year ago. Alcoa said revenue in the quarter rose 55% from a year earlier to $6.3 billion.
After-tax operating income from its alumina and chemicals, primary metals, flat-rolled products and packaging and consumer divisions all rose from the second quarter, but income from engineered products operation dropped.
In the earnings report, Alcoa CEO Alain Belda said that in the fourth quarter the company would continue to benefit from its acquisitions, cost cutting and the seasonal strength of its packaging business.
But he cautioned that "we also expect softness to continue in the construction, transportation, building and distribution markets and see no relief from the higher energy prices.''
Alcoa's natural gas and fuel oil bill was $70 million higher in the first nine months of this year. The company uses natural gas and fuel oil to convert bauxite, the raw ore, into alumina, which is then used to make aluminum.
Rising electricity prices are also a problem for Alcoa because aluminum production requires a lot of electricity.
