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Researched by Industrial Info Resources (Sugar Land, Texas)--Aluminum producer Alcoa Incorporated (NYSE:AA) (Pittsburgh, Pennsylvania) saw significant overall growth in the second quarter of 2014, as all business segments reported profits based on stronger pricing, improved midstream and downstream volumes, and higher sales. Alcoa reported net income of $138 million, compared with a net loss of $119 million in second-quarter 2013.
Industrial Info is tracking $5.47 billion in global projects involving Alcoa, including 14 projects with a total investment value of $1.87 billion in the U.S. and Canada.
"We have been very strong on the organic growth side," said Klaus Kleinfeld, the chairman and chief executive officer of Alcoa, in a conference call. "Just to pick out a few things that happened during the quarter: a $100 million investment that we announced to expand our structural engine component offering in La Porte, Indiana, and a further $25 million investment to enhance our jet engine blade performance in Hampton, Virginia." Industrial Info is following both of these projects.
View Plant Profile - 1517015 1010304
View Project Report - 300171701 300157175
Total sales stood at $5.84 billion, basically unchanged from second-quarter 2013. Higher volumes and stronger productivity brought the Engineered Products and Solutions segment, which is the company's downstream business, record quarterly income. Global Rolled Products, the company's midstream segment, benefited from strong sheet sales as automotive demand, particularly for auto lightweighting, grew worldwide. The upstream Alumina and Primary Metals segments benefited from higher energy-related sales.
During the second quarter, Alcoa announced that it had signed a definitive agreement to acquire Firth Rixson (Sheffield, England), a leading designer and manufacturer of aerospace jet engine parts, for $2.85 billion. Alcoa expects to see a sharp 8% to 9% growth in the global aerospace market in 2014, as demand remains high for large commercial aircraft and regional jets. Firth Rixson's revenues are expected to grow 60% during the next three years to $1.6 billion, while sales are expected to grow 12%--a rate more than double that of the global aerospace market.
Alcoa also began operations at its smelter in Saudi Arabia, which the company said in a press release is "the lowest-cost aluminum facility in the world." It also curtailed 147,000 metric tons of smelting capacity at the Sao Luis and Pocos de Caldas facilities in Brazil. Next month, Alcoa expects to end operations at the 190,000-metric-ton Point Henry aluminum smelter in Australia.
Capital expenditures in the second quarter were reported to be $258 million, compared with $286 million in the same period last year.
"The downstream [segment] had its highest-ever profit, as well as margins," Kleinfeld said in the conference call. "The midstream profit is up 34%; and on the upstream side, we also show an improved performance. This is now a story that goes on for an 11th consecutive quarter. We see productivity [improvements] of $302 million coming from all segments, year-over-year. The net debt on the balance sheet is much healthier at $6.9 billion, the lowest debt level since September 2007, and a positive free cash flow of $260 million."
Alcoa's long-term projection of a 7% growth in global aluminum demand remains unchanged. But executives predict that the 2014 global aluminum deficit will increase, while the alumina surplus is expected to tighten.
Among the key end markets, executives continue to expect global growth of 4% to 6% in building and construction, and growth of 1% to 4% in automotive. However, Alcoa continues to expect to see the industrial gas turbines market contract between 8% and 12%, due to weaker orders for new gas turbines and spare parts. For the North American transportation market, Alcoa raised its expectations for growth to between 10% and 14% as truck orders strengthen.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking $5.47 billion in global projects involving Alcoa, including 14 projects with a total investment value of $1.87 billion in the U.S. and Canada.
"We have been very strong on the organic growth side," said Klaus Kleinfeld, the chairman and chief executive officer of Alcoa, in a conference call. "Just to pick out a few things that happened during the quarter: a $100 million investment that we announced to expand our structural engine component offering in La Porte, Indiana, and a further $25 million investment to enhance our jet engine blade performance in Hampton, Virginia." Industrial Info is following both of these projects.
View Plant Profile - 1517015 1010304
View Project Report - 300171701 300157175
Total sales stood at $5.84 billion, basically unchanged from second-quarter 2013. Higher volumes and stronger productivity brought the Engineered Products and Solutions segment, which is the company's downstream business, record quarterly income. Global Rolled Products, the company's midstream segment, benefited from strong sheet sales as automotive demand, particularly for auto lightweighting, grew worldwide. The upstream Alumina and Primary Metals segments benefited from higher energy-related sales.
During the second quarter, Alcoa announced that it had signed a definitive agreement to acquire Firth Rixson (Sheffield, England), a leading designer and manufacturer of aerospace jet engine parts, for $2.85 billion. Alcoa expects to see a sharp 8% to 9% growth in the global aerospace market in 2014, as demand remains high for large commercial aircraft and regional jets. Firth Rixson's revenues are expected to grow 60% during the next three years to $1.6 billion, while sales are expected to grow 12%--a rate more than double that of the global aerospace market.
Alcoa also began operations at its smelter in Saudi Arabia, which the company said in a press release is "the lowest-cost aluminum facility in the world." It also curtailed 147,000 metric tons of smelting capacity at the Sao Luis and Pocos de Caldas facilities in Brazil. Next month, Alcoa expects to end operations at the 190,000-metric-ton Point Henry aluminum smelter in Australia.
Capital expenditures in the second quarter were reported to be $258 million, compared with $286 million in the same period last year.
"The downstream [segment] had its highest-ever profit, as well as margins," Kleinfeld said in the conference call. "The midstream profit is up 34%; and on the upstream side, we also show an improved performance. This is now a story that goes on for an 11th consecutive quarter. We see productivity [improvements] of $302 million coming from all segments, year-over-year. The net debt on the balance sheet is much healthier at $6.9 billion, the lowest debt level since September 2007, and a positive free cash flow of $260 million."
Alcoa's long-term projection of a 7% growth in global aluminum demand remains unchanged. But executives predict that the 2014 global aluminum deficit will increase, while the alumina surplus is expected to tighten.
Among the key end markets, executives continue to expect global growth of 4% to 6% in building and construction, and growth of 1% to 4% in automotive. However, Alcoa continues to expect to see the industrial gas turbines market contract between 8% and 12%, due to weaker orders for new gas turbines and spare parts. For the North American transportation market, Alcoa raised its expectations for growth to between 10% and 14% as truck orders strengthen.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
