Alcoa Results Trounce Estimates

(RTTNews) - Alcoa, Inc. (AA), the largest U.S. aluminum producer, said Monday after the markets closed that it swung to a fourth quarter profit, helped by higher aluminum prices and strong demand from the automotive and aerospace markets, as well as the absence of a hefty goodwill impairment charge that the company took in the prior year period.

The company's quarterly earnings per share, excluding items, also handily beat analyst estimates as did its quarterly sales.

"Our strong fourth quarter capped a pivotal year as we significantly accelerated Alcoa's transformation," said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. "As we built out our value-add businesses, we gained profitable share across exciting downstream growth markets and captured aerospace and automotive growth in the midstream. On the commodity side, our hard work reshaping the portfolio continues to pay off with improved performance for the 13th quarter in a row."

Looking forward, Alcoa forecasts global aluminum demand to grow 7% in 2015.

Alcoa was replaced by Nike, Inc. (NKE) on the Dow Jones Industrial Average Index in 2013. However, it is s still among the first major U.S. companies to report earnings for a new season and is considered a bellwether.

Alcoa shares are currently gaining 1.36% in after hours trading after closing the day's regular trading session at $16.17, up 6 cents. The shares trade in a 52-week range of $10.05 to $17.75.

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. Alcoa has taken steps to cut costs and reallign production in order to remain competitive.

In November, Alcoa completed its $2.85 billion acquisition of jet engine component maker Firth Rixson. Last month, Alcoa announced plans to further expand its global aerospace business through a definitive agreement to buy Germany-based TITAL. Additionally, Alcoa is doubling its jet engine coating technology capacity at its Whitehall, Michigan, U.S. facility.

Alcoa sold three European rolling mills and completed closure of Australian can sheet rolling mills during the fourth quarter. Alcoa also continued to reduce costs in its upstream businesses. The company sold stakes in upstream assets during the fourth quarter.

Alcoa's Alumina segment reported an after-tax operating income, or ATOI, of $178 million for the fourth quarter, up from $70 million a year earlier. Alumina production totaled 4,161 kmt in the fourth quarter, down from 4,249 kmt in the fourth quarter of last year.

The company's Primary Metal segment reported a third quarter after-tax operating income of $267 million, compared to an after-tax operating loss of $35 million in the fourth quarter of 2013.

Fourth quarter ATOI for the company's Global Rolled Products segment jumped 239% from last year to $71 million.

Fourth quarter ATOI from the company's Engineered Products and Solutions segment fell 2% year-over-year to $165 million. Excluding the Firth Rixson integration impact of $12 million, ATOI was a fourth quarter record and the 19th consecutive quarter of year-over-year improvement. For the fourth quarter ended December 31, 2014, the company reported net income of $159 million or $0.11 per share, compared to a net loss of $2.3 billion or $2.19 per share for the year-ago quarter.

The year-ago quarter results included a goodwill impairment of $1.73 billion.

Excluding special items, adjusted net income for the fourth quarter was $432 million or $0.33 per share, compared to $40 million or $0.04 per share in the prior year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.25 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Sales for the fourth quarter rose 14% to $6.38 billion from $5.59 billion in the same quarter last year. Fourteen analysts had a consensus revenue estimate of $5.99 billion for the fourth quarter.