Alcoa reports solid Q1 2016 performance

Lightweight metals leader Alcoa reported solid first quarter 2016 performance. Arconic segments (Value-Add) reported year-over-year profit growth and the Upstream segments, Alumina and Primary Metals, remained profitable despite continued low pricing. The company is on track to complete its separation in the second half of 2016.

"Each of our segments delivered strong performance,” said Klaus Kleinfeld, Chairman and Chief Executive Officer. “Profits grew in all of the Arconic segments, led by automotive and aerospace; Upstream segments maintained profitability in a persistently low pricing environment. Productivity was high across the portfolio and we divested non-essential assets to strengthen the balance sheet. We won new contracts for bauxite supply, 3-D printed titanium aerospace parts, and airfoils in our largest IGT deal ever. Looking ahead, we are well on track to meet or exceed our three-year business targets in our segments, with the exception of EPS, where we have revised expectations to better reflect aerospace market conditions and Firth Rixson performance. Our separation is on course for completion later this year."

Alcoa reported first quarter 2016 net income of $16 million, or $0.00 per share, including $92 million in special items. Special items include restructuring-related costs of $63 million (approximately 75 percent non-cash) primarily to further optimize the new Alcoa. Year-over-year, first quarter 2016 results compare to net income of $195 million, or $0.14 per share.

Excluding the impact of special items, first quarter 2016 net income was $108 million, or $0.07 per share. These results reflect a $255 million net income reduction from the year-ago period largely due to a 40 and 26 percent decline in the Alumina Price Index (API) and aluminum pricing, respectively. Unfavorable pricing was partially offset by $364 million in year-over-year productivity savings. In first quarter 2015, Alcoa reported net income excluding special items of $363 million, or $0.28 per share.

Year-over-year, revenue increased 5.7 percent from acquisitions and organic growth, offset by a 20.7 percent decline from continued low alumina and aluminum pricing, foreign exchange impacts, and divested, curtailed or closed facilities undertaken largely to strengthen the new Alcoa business. As a result of these combined factors, Alcoa reported first quarter 2016 revenue of $4.9 billion, down 15 percent from $5.8 billion in the first quarter of 2015.