Alcoa releases preliminary Q2 results, indicate growth in production and cash balance amid COVID-19 crisis

Alcoa Corporation, on Wednesday, July 8, released preliminary second-quarter results of 2020, which indicated that even amidst the COVID-19 pandemic, the company’s cash balance showed positive sentiment along with increased productivity and steadily growing operations. The cash balance is estimated to cross $950 million.

But the revenue is expected to drop by 8 to 9 per cent from $2381 in Q1 2020 to $2100 - $2,175 in Q2, according to the information revealed.  Year-on-year, the second quarter's revenue is estimated to decline by nearly 20 per cent, attributing to lower demand for aluminium value-added products.

It is to be noted here that all the information is preliminary and based upon data available as of July 8. It is subject to change and finalisation based on the quarter-end closing processes.

Alcoa’s net loss in Q2 is expected to plunge from $42 to $15 to $0. Adjusted loss per share is, therefore, likely to be down from 0.23 to $0.08-$0.00.

Adjusted EBITDA excluding special items likely to stand at $175-$190 in Q2 compared to $321 in Q1.

Alcoa’s results are primarily driven by the prices of alumina and aluminium, which at the beginning of Q2 stood low. But later on, they increased slightly compared to the prices in the initial period of the second quarter of 2020.

“At Alcoa, we focus first on the safety and health of our employees, and that commitment has become even more apparent throughout this pandemic,” said President and Chief Executive Officer Roy Harvey. “We’ve not only managed to sustain our operations during these challenging times, but we’ve also continued to drive for sustainable improvements.”

He added, “In the second quarter, we realized gains in productivity, cost savings and also increased our cash balance. Now, we’re working to increase overall liquidity and gain even greater flexibility as we execute on our strategy, including the ongoing portfolio review and the sale of non-core assets.”

As far as the productions are concerned, the output at Alcoa’s mining and refining locations is expected to record a rise by approximately 5 per cent and 2 per cent, respectively, at the end of Q2 from the production in the first quarter. The primary aluminum production is expected to increase by approximately 3 percent compared to Q1.

In response to COVID-19, Alcoa said that it continued to protect the health of the company’s workforce, took all the necessary steps to contain the virus from spreading, and mitigated impacts. All of Alcoa’s bauxite mines, alumina refineries, and aluminium manufacturing facilities are in operation with comprehensive measures ensuring the well-being of the employees and business continuity.