DALLAS—Alcoa Inc. said its third-quarter income soared as higher aluminum prices and lower costs for raw materials boosted its core primary-metals business.
Alcoa has been pivoting from its traditional role of mining and smelting aluminum to become a more diversified maker of lightweight metal and alloy products for aerospace, autos and other industries. But it was the core metals business that propelled Alcoa in the third quarter.
The primary-metals segment posted operating earnings of $245 million, up from just $8 million a year earlier. The company said that costs for the raw material alumina were lower while the price of aluminum rose 16 per cent. Alcoa said the division also benefited from higher productivity. The company has shuttered plants and taken other steps to cut costs.
Chairman and CEO Klaus Kleinfeld said that the primary-metals segment “performed at levels not seen since before the downturn” in 2008.
The New York-headquartered company has been increasing its focus on supply the aerospace industry and is benefiting from demand for aluminum and other lightweight materials used to make planes more fuel-efficient. Alcoa’s engineered-products division had a quarterly record with operating income of $209 million, up 9 per cent, and its rolled-products segment earned $103 million, a 45 per cent gain.
Alcoa is having a good run. Recently, it announced contracts of at least $1 billion each to supply Boeing Co. and jet engine maker Pratt & Whitney. Last week, Alcoa opened what it touted as the world’s biggest aluminum-lithium plant in Indiana to make parts for aerospace.
Can the company keep rolling? Kleinfeld thinks so. During a conference call, he pointed to several years of backlogs at aircraft manufacturers and predicted aerospace sales gains of 8 to 9 per cent this year. He said an aging fleet should raise demand for new vehicles in North America, and a rising middle class in China will want more cars.
Overall, net income was $149 million, or 12 cents per share, compared with $24 million, or 2 cents per share, a year ago. Excluding charges for restructuring and acquisitions, the company said that adjusted earnings were 31 cents per share. Analysts, who usually exclude items, expected 22 cents per share, according to FactSet.
Revenue rose 8 per cent to $6.24 billion, topping the $5.86 billion forecast of analysts.