Alcoa reports an unexpected first-quarter profit, closes smelters

Alcoa, the largest US aluminium producer, reported an unexpected first-quarter profit after orders rose and it closed higher-cost smelting capacity. The shares advanced in German trading.

Net income fell to $94 million (Dh345.2 million), or nine cents a share, from $308 million, or 27 cents, a year earlier, New York-based Alcoa said on Tuesday in a statement.

Profit, excluding restructuring costs and other items, was ten cents a share, compared with the average estimate for a four cent loss from 19 analysts surveyed by Bloomberg. Sales rose 0.8 per cent to $6.01 billion, beating the $5.77 billion average of 12 estimates. The earnings were "driven by higher-than-expected profitability from every operating segment," Brian Yu, an analyst at Citigroup in San Francisco who estimated a six cent loss, said in a note. "Good cost control likely played a major role."

Shutting plants

Alcoa traded at €7.574 in Frankfurt in mid-morning local time. That's equivalent to $9.937, a 6.6 per cent increase from Tuesday's closing price in New York. The stock dropped 48 per cent in the year through yesterday's close, the biggest decline on the Dow Jones Industrial Average.

Alcoa, traditionally the first company in the DJIA to report quarterly earnings, announced it would shut older plants in North America and Europe in January. Chief executive officer Klaus Kleinfeld is proceeding with an $11 billion joint venture in Saudi Arabia, which Alcoa says will be the world's most efficient integrated aluminium plant.

The company has rebounded from a fourth quarter in which it lost three cents a share, its first loss on an adjusted basis since 2009. Alcoa said on Tuesday its four units — alumina, aluminium, rolled products and engineered products — each recorded an operating profit after tax.