Alcoa Inc , the largest U.S. aluminum producer, posted a stronger-than-expected second-quarter profit on Monday and raised its estimate for global aluminum consumption, sending its shares up 3 percent.
The company, whose results are often viewed as a bellwether of the U.S. economy, cited strength in several industrial sectors and raised its estimate for aluminum consumption this year, even as metal prices have been falling recently.
Alcoa shares rose to $11.24 in extended trade after closing at $10.87 in the regular session on the New York Stock Exchange.
It's constructive and it helps start the earnings season off on a positive note, said Brian Hicks, portfolio manager of U.S. Global Investors in San Antonio, Texas.
From the standpoint of Alcoa, they see the economy continuing to expand. It's robust enough that they have to increase their forecast for global aluminum production.
Net earnings were $136 million, or 13 cents per share, compared with a loss of $454 million, or 47 cents per share in the same quarter last year, the Pittsburgh-based company said. Earnings from continuing operations were $137 million, 13 cents per share.
Revenue rose 22 percent to $5.2 billion.
Analysts on average were expecting earnings of 11 cents per share and revenue of $5.047 billion, according to Thomson Reuters I/B/E/S. Please see: http://link.reuters.com/gyf27m
During the quarter, Alcoa said there was a 1-percent increase in third-party prices for alumina -- the raw material for aluminum. However, that was offset by a 1-percent decrease in realized prices for the metal.
Alcoa said there was strong revenue growth over the first quarter in several markets, in particular in packaging, commercial transportation and building and construction.
The top and bottom line growth was driven by higher volumes from stronger end markets and continued gains from our productivity programs, said Chairman and Chief Executive Officer Klaus Kleinfeld.
Based on this improved end-market demand, we are raising our projection for aluminum consumption from 10 percent to 12 percent this year.
In the past three months, the price of aluminum in London has dropped sharply, from over $2,400 per tonne in April to around $2,000 as weak demand for cars, planes and construction and uncertainty over the strength of the global recovery have weighed on the metal.
(Reporting by Steve James, editing by Bernard Orr)