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Alcoa's profits shine
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April 6, 1998: 2:51 p.m. ET
World's largest aluminum maker posts 4Q income well ahead of expectations
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NEW YORK (CNNfn) - Shares of Aluminum Co. of America rose modestly Monday after the company, the world's largest aluminum maker, posted first-quarter profits well ahead of Wall Street expectations.
Alcoa (AA) stock climbed 1-1/4 to 70-1/4 after the Pittsburgh-based company reported net fourth quarter income of $209.9 million, or $1.24 per diluted common share. Wall Street estimates had pegged per-share profit at $1.06.
The results marked a more than 30 percent increase in profits from the year-ago quarter, when Alcoa reported net income of $159.1 million, or 92 cents a share.
Monday's stock scenario was a near mirror image of investor reaction in January, when Alcoa's shares were sent sharply lower on disappointing fourth-quarter profits of $210.3 million, or $1.23 a share.
Paul O'Neill, Alcoa's chairman and chief executive officer, called the earnings results "excellent."
"Being able to perform at this level with low metal prices validates our belief and determination that we can be a high-performance growth company in a cyclical industry," O'Neill said.
Alcoa provides fabricated and finished aluminum products to customers in industries ranging from aerospace to construction.
Recently, however, world demand for aluminum, estimated at 28.2 million tons in 1997, has slackened. Globally, growth in demand is expected to slow 0.7 percent in 1998 from a 5.4 percent growth rate in 1997.
Alcoa reported first-quarter earnings of $229.7 million, before marking to market aluminum commodity contracts valued at $19.8 million, or 12 cents per share. The company said $17.3 million, or 10 cents per share, is tied to fabricated product sales that will be shipped in future quarters.
Revenues in the fourth quarter were $3.4 billion, as compared to $3.2 billion in the comparable period a year ago. Aluminum shipments totaled 778,000 metric tons, up from 720,000 metric tons a year ago. The return on annualized shareholder equity rose year-to-year from 13.7 percent to 17.9 percent.
In early March, Alcoa agreed to acquire Alumax Inc., the world's fifth largest aluminum producer, in a cash-and-stock merger valued at $3.8 billion.
The combined company anticipates revenues in 1998 of $17 billion.
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Alcoa
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