Alcoa’s share price jumped more than 5.5% in after-hours trading Thursday as the US aluminum manufacturer rebounded strongly from a loss a year ago.
Pittsburgh-based Alcoa posted record net income of $337m and earnings per share of $1.76 in the third quarter, the company said in its earnings report.
Alcoa reported a loss of $49m, or $0.26 per share, in the third quarter of 2020.
Revenue up sequentially
Revenue grew 9.74% quarter-over-quarter to $3.1m from $2.83m and 31.18% year-over-year from $2.37m.
“The strategic work we’ve been implementing across our company has helped us effectively capture the benefits from very strong market fundamentals and deliver another excellent quarter with record profitability,” said Alcoa president and CEO Roy Harvey in a news release accompanying the financial report.
Company announces dividend
Alcoa announced a quarterly cash dividend of $0.10 per share and said it will repurchase $500m worth of shares. The company previous announced a $150m share buyback plan.
Alcoa expects double-digit growth year-over-year from its aluminum segment for all of 2021 as global demand exceeds 2020 levels by 10% and surpasses pre-pandemic levels. But the company anticipates bauxite production to decline by one million dry metric tonnes (MT) to between 49 MT and 50 MT. Alcoa attributed the decline primarily to reduced demand resulting from an unloader outage at its Alumar refinery in Brazil.
The company is continuing to seek a resolution regarding its San Ciprian aluminum smelter in Spain, where workers went on strike on 27 September and blocked shipments of the metal. Alcoa is attempting to sell the smelter to a third party due to high power costs which, the company says, exceed averages for smelters globally and especially in the European Union.
Q4 income could fall by $90m
For the fourth quarter, the company is projecting a potential $90m income decline due to higher power and raw materials costs and a 52 MT reduction in aluminum shipments. During the third quarter, aluminum shipments declined 6% on a quarterly basis.
Alcoa cited the decline on accumulated inventory sales at the San Ciprian smelter and a lack of Canadian railcar activity for Canadian plants as causes. European value-add aluminum product shipments dipped 5% quarter-over-quarter due to usual seasonal declines, the company said.
Production review continues
Alcoa is continuing a five-year review of its production assets. The firm said it has addressed 700,000 MT of global aluminum smelting capacity since launching the review in 2019.
As part of the review, the company has completed a curtailment at its Italco smelter in Washington state, repowered its Portland aluminum smelter in Australia, and restarted 268,000 MT of capacity at the Alumar smelter in Brazil.
Moving towards 2022, the company warned that it still faces uncertainty as the Covid-19 pandemic continues.
Alcoa’s future activities could include alumina production. The company is evaluating a potential joint development with Australia’s FYI resources. The agreement was announced in a 30 September news release.
If development project goes ahead, Alcoa could produce highly sought alumina for use in LED lighting and lithium batteries deployed in electric vehicles.