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Released October 10, 2013 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Aluminum producer Alcoa Incorporated (NYSE:AA) (Pittsburgh, Pennsylvania) reported overall improvement in the third quarter of 2013, as a solid operating performance led to productivity gains that helped overcome weak prices in the metal markets. The company reported net income of $24 million for the quarter, compared with a net loss of $143 million in the third quarter of 2012.
Total sales stood at $5.77 billion, a 1.17% decrease from the same period last year. The Engineered Products and Global Primary Products segments, which accounted for more than half of the quarter's revenues and almost 80% of segment after-tax operating income, showed significant improvement and led the overall gains. Along with the Global Primary Products segment, they endured typical third-quarter weaknesses, as well as falling metal prices; the cash price of aluminum on the London Metal Exchange saw a 3% sequential decline and a 7% decline from the same period last year. The Global Primary Products segment also saw lower premiums, but nonetheless reported stronger productivity.
Alcoa also recorded $109 million in after-tax restructuring-related charges for the quarter. The company is nearing completion on a smelter that it is building in a joint venture with Ma'aden (Riyadh, Saudi Arabia). The smelter, which is expected to have a total operating capacity of 740,000 metric tons per year when it begins operations in 2014, is designed to be the lowest-cost in the world.
Capital expenditures were reported to be $250 million for the quarter, compared with $302 million in third-quarter 2012. For the first nine months of the year, capital expenditures totaled $771 million, compared with $863 million for the same period in 2012.
Industrial Info is tracking more than $4.7 billion in projects involving Alcoa, including the $600 million modernization of the Massena Aluminum Operations East plant in Massena, New York. The project, which is intended to increase production and reduce emissions at both the Massena East and West plants, involves adding a new pot line that will Increase output by 19,000 tons per year and reduce emissions 70%. The East plant's smelter currently has an output of 125,000 tons per year. Industrial Info is also tracking the $52 million modernization of the West plant.
Alcoa also recently began construction on a $275 million expansion at a rolling mill in Alcoa, Tennessee. Production will feed the growing demand for aluminum sheet from the automotive market.
"This is a strong third quarter, driven by performance," said Klaus Kleinfeld, the chairman and chief executive officer of Alcoa, in a conference call. "Our repositioning is working--we increased the earnings sequentially year-over-year, strongly driven by the downstream profitability. Upstream improved has improved its performance for eight consecutive quarters."
Alcoa executives continue to expect a 7% growth in global aluminum demand. Among the key end markets, they expect a 9% to 10% growth in aerospace; 5% to 9% growth in heavy trucks and trailers; 4% to 5% growth in commercial building and construction; 3% to 5% growth in industrial gas turbines; and 1% to 4% growth in automotive.
Among the projects set to be completed by the end of the year is the $300 million expansion of an automotive plant in Davenport, Iowa. The commissioning process for the new facilities already has begun.
"We are on target to meet our 2013 goals, which were set at much higher metal prices," said William Oplinger, the executive vice president and chief financial officer of Alcoa, in the conference call. "Our businesses are focused on deploying aggressive operational targets, and they met this call to action, generating $825 million in pre-tax productivity improvements year-to-date, surpassing our full-year target for 2013 with three months remaining in the year. We continue to take a disciplined approach to capital spending; our target for 2013 was to maintain total capital spend of $1.5 billion, and on a year-to-date basis, we're well below those targets."
For more information, visit Industrial Info's International Metals & Minerals Project Database.
View Plant Profile - 1015548 1013794
View Project Report - 14003677 14003797
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine 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.
Total sales stood at $5.77 billion, a 1.17% decrease from the same period last year. The Engineered Products and Global Primary Products segments, which accounted for more than half of the quarter's revenues and almost 80% of segment after-tax operating income, showed significant improvement and led the overall gains. Along with the Global Primary Products segment, they endured typical third-quarter weaknesses, as well as falling metal prices; the cash price of aluminum on the London Metal Exchange saw a 3% sequential decline and a 7% decline from the same period last year. The Global Primary Products segment also saw lower premiums, but nonetheless reported stronger productivity.
Alcoa also recorded $109 million in after-tax restructuring-related charges for the quarter. The company is nearing completion on a smelter that it is building in a joint venture with Ma'aden (Riyadh, Saudi Arabia). The smelter, which is expected to have a total operating capacity of 740,000 metric tons per year when it begins operations in 2014, is designed to be the lowest-cost in the world.
Capital expenditures were reported to be $250 million for the quarter, compared with $302 million in third-quarter 2012. For the first nine months of the year, capital expenditures totaled $771 million, compared with $863 million for the same period in 2012.
Industrial Info is tracking more than $4.7 billion in projects involving Alcoa, including the $600 million modernization of the Massena Aluminum Operations East plant in Massena, New York. The project, which is intended to increase production and reduce emissions at both the Massena East and West plants, involves adding a new pot line that will Increase output by 19,000 tons per year and reduce emissions 70%. The East plant's smelter currently has an output of 125,000 tons per year. Industrial Info is also tracking the $52 million modernization of the West plant.
Alcoa also recently began construction on a $275 million expansion at a rolling mill in Alcoa, Tennessee. Production will feed the growing demand for aluminum sheet from the automotive market.
"This is a strong third quarter, driven by performance," said Klaus Kleinfeld, the chairman and chief executive officer of Alcoa, in a conference call. "Our repositioning is working--we increased the earnings sequentially year-over-year, strongly driven by the downstream profitability. Upstream improved has improved its performance for eight consecutive quarters."
Alcoa executives continue to expect a 7% growth in global aluminum demand. Among the key end markets, they expect a 9% to 10% growth in aerospace; 5% to 9% growth in heavy trucks and trailers; 4% to 5% growth in commercial building and construction; 3% to 5% growth in industrial gas turbines; and 1% to 4% growth in automotive.
Among the projects set to be completed by the end of the year is the $300 million expansion of an automotive plant in Davenport, Iowa. The commissioning process for the new facilities already has begun.
"We are on target to meet our 2013 goals, which were set at much higher metal prices," said William Oplinger, the executive vice president and chief financial officer of Alcoa, in the conference call. "Our businesses are focused on deploying aggressive operational targets, and they met this call to action, generating $825 million in pre-tax productivity improvements year-to-date, surpassing our full-year target for 2013 with three months remaining in the year. We continue to take a disciplined approach to capital spending; our target for 2013 was to maintain total capital spend of $1.5 billion, and on a year-to-date basis, we're well below those targets."
For more information, visit Industrial Info's International Metals & Minerals Project Database.
View Plant Profile - 1015548 1013794
View Project Report - 14003677 14003797
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine 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.
