Alcoa Q3 Profit Misses Street; Shares Down

(RTTNews) - Alcoa Inc. (AA), the largest producer of aluminum in the US, Thursday reported a sharp decline in profit for the third quarter, as sales dropped 11 percent reflecting divestitures and currency headwinds. Both the earnings and revenues fell short of Wall Street analysts' estimates, sending its shares down a near 5 percent in the after-hours trading.

New York-based Alcoa's third-quarter profit dropped to $44 million or $0.02 per share from $149 million or $0.12 per share last year.

Adjusted earnings declined to $0.07 per share from $0.31 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.14 per share. Analysts' estimates typically exclude special items.

Sales for the quarter dropped 11 percent to $5.57 billion from $6.24 billion last year. Analysts had a consensus revenue estimate of $5.68 billion for the quarter.

Divesting and closing lower-margin businesses and market headwinds caused third quarter revenue to fall 21 percent, the company said in a statement. However, the decline in revenues were softened by strong organic growth in aerospace, automotive and alumina business, combined with acquisitions.

"The third quarter brought economic headwinds and significant volatility in some of our markets," said Klaus Kleinfeld, Chairman and Chief Executive Officer. "We continue to be laser focused on the things we can control. We have successfully made our Upstream businesses less vulnerable to commodity downswings."

Alcoa's earnings report are closely watched by investors as it's one of the first major companies to report quarterly results and unofficially kicks starts the earnings season.

Last month, Alcoa announced its decision to separate into two companies-- a higher-margin manufacturing operations and a smelting and refining business. The split is expected to happen by the second half of next year.

Alcoa was among the companies that were hit most during the recession. The company cut more than 20,000 jobs and closed plants in the U.S. and Europe to tide over the global economic slowdown. Like other aluminum producers, the company had been suffering from declining aluminum prices caused by a glut.

AA closed Thursday's trading at $11.01, up $0.07 or 0.64%, on the NYSE. The stock, however, dropped $0.46 or 4.18% in the after-hours trade.