CEO Klaus Kleinfeld warned of weak economic conditions through the year, particularly in Europe, as confidence in the global recovery faded.
That sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing.
The third-quarter profit jumped from a year ago, but was lower than the second quarter and fell short of Wall Street expectations, which had already been lowered because of a slump in global metal prices.
Chief Financial Officer Chuck McLane said worries about Europe's debt crisis had prompted customers there to reduce orders.
Kleinfeld said that battered confidence was the biggest problem. We've seen strength in many of our markets, despite the sharp slowdown in Europe that hurt our sequential results and I'm more concerned about lack of confidence than about market fundamentals.
It almost looks like the world is worrying itself into another recession and that should not be allowed to happen, he told Wall Street analysts on a conference call.
I think the problems that we have today ... those fears, not a shrinking market, were the main reason for the weak quarter.
Kleinfeld said Alcoa stuck with its forecast for global aluminum demand growth of 12 percent this year, although it expected a decline in Europe, North America and Brazil.
But that decline will be made up by strength in emerging markets and he increased the growth forecast for China from 15 percent to 17 percent.
Still, one analyst said things could get worse. There's a bigger decline in price so far in the fourth quarter and seasonally it's worse, said Charles Bradford of Bradford Research in New York.
You get the holidays toward the end of the year and that slows everybody down. It's going to be much worse.
Alcoa, the first Dow component company to report third-quarter results, said net earnings were $172 million, or 15 cents per share, compared with $61 million, or 6 cents per share, a year earlier.
The Pittsburgh-based company said income from continuing operations was also 15 cents per share, but down from 28 cents per share in the second quarter. Analysts on average were expecting earnings of 22 cents per share, according to Thomson Reuters I/B/E/S.
Alcoa said revenue rose 21 percent to $6.4 billion from a year earlier, but was 3 percent lower than the second quarter of this year as metals prices slumped sharply.
Aluminum prices fell almost 20 percent in the third quarter on global economic concerns and Alcoa's share price fell 41 percent during the same period.
In his call with analysts, Kleinfeld blamed the price drop on, very offensive short-selling going on by speculators.
They are betting against aluminum as a proxy for betting against the global economy, the CEO said.
Still, aluminum prices could easily rebound if the sentiment around the European economy shows any improvement, analysts said, which would immediately benefit Alcoa.
Visibility is very low, so it's hard to know what's around the corner, but even with earnings coming in below consensus, we shouldn't overreact, said Bridget Freas, an analyst with Morningstar in Chicago.
It's a canary in the coal mine as far as economic activity. In terms of Q4, if the economy turns around and does better, I think Alcoa will turn around and do better, said Stephen Massocca, fund manager with Wedbush Morgan in San Francisco.
Alcoa stock was down 4.6 percent to $9.83 in after-hours trading on the New York Stock Exchange.
(Reporting by Steve James, Carole Vaporean, Braden Reddall, Matt Daily and Ernest Scheyder in New York; editing by Andre Grenon and Martin Howell)