Alcoa reports 9% revenue growth in Q4; full year 2016 revenue drops 17%

Alcoa Corporation, a global leader in bauxite, alumina, and aluminium production reported fourth quarter 2016 results on Tuesday, January 24, registering profit growth at the combined segment level and an improved cash position.

Highlights:

• Net loss of $125 million as a result of costs to streamline portfolio
• Excluding special items, adjusted net income of $26 million, or $0.14 per share
• EBITDA excluding special items of $335 million, up 18 per cent sequentially on rising alumina pricing
• Revenue of $2.5 billion, up 9 per cent sequentially, reflecting higher volume in the Company’s rolled products business, and higher alumina pricing
• $853 million cash balance and $1.4 billion of debt as of December 31, 2016

“Alcoa’s first reporting period as a new, standalone, publicly-traded company points to our ability to deliver shareholder value,” said Roy Harvey, Chief Executive Officer of Alcoa. “Rising alumina and aluminium prices improved the bottom line, our alumina segment had exceptional profit growth in a stronger market environment and doubled margins, while our bauxite business also increased profits and reported robust margins. In addition, we continued to streamline our portfolio and generated cash to strengthen the balance sheet.”

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Mr. Harvey added: “We’ve entered 2017 focused on our strategic priorities. We will reduce complexity and costs across Alcoa, remain disciplined with cash, and focus on smart investments with strong returns.”

In fourth quarter 2016, Alcoa reported a net loss of $125 million compared to a net loss of $10 million in third quarter 2016. Results include $151 million of special items primarily related to the permanent closure of Suralco’s refinery and mines in Suriname and the impairment of Alcoa of Australia Limited’s (AofA) interests in a Western Australia (WA) gas field.

Excluding the impact of special items, fourth quarter 2016 adjusted net income was $26 million, or $0.14 per share. In third quarter 2016, Alcoa reported an adjusted net loss of $95 million, or $(0.52) per share, excluding special items.

Alcoa reported fourth quarter 2016 adjusted EBITDA excluding special items of $335 million, up 18 per cent from third quarter 2016. Higher alumina and metal prices drove the sequential change in adjusted EBITDA, more than offsetting increased costs primarily tied to energy.

In fourth quarter 2016, Alcoa reported revenue of $2.5 billion, up 9 per cent sequentially; reflecting higher volumes in the Company’s rolled products business, as well as rising alumina and aluminium pricing.

2016 Full-Year Results

In 2016, Alcoa reported a net loss of $400 million. Excluding special items, the Company reported an adjusted net loss of $227 million, or $(1.24) per share. The full year net loss was driven largely by costs associated with portfolio restructuring decisions, including the closure of the Warrick smelter and the Suralco refinery and mines, and the impairment of the WA gas field.

Adjusted EBITDA excluding special items for 2016 was $1.1 billion, compared to $1.8 billion in 2015, due to lower alumina and aluminium pricing during the first three quarters and incremental costs to operate the Warrick, IN rolling mill as a cold metal plant, partially offset by net productivity improvements. Revenue in 2016 was $9.3 billion, down 17 per cent from 2015, reflecting lower pricing and volumes in alumina and aluminium, slightly offset by higher third-party bauxite shipments.

Outlook

For 2017, the Company projects relatively balanced global bauxite and alumina markets and a modest global aluminium surplus of 400 thousand to 800 thousand tons. Alcoa is projecting 2017 global aluminium demand growth of 4 per cent over 2016.

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