Alcoa slashes China auto, truck, construction views

Alcoa shares dropped in extended trading on Thursday last week after it missed third-quarter earnings and revenue forecasts and slashed its outlook on key Chinese end markets.

Earnings sank 77% to 7 cents per share, as revenue dropped 11% to $5.57 billion. Consensus was for EPS of 13 cents on revenue of $5.65 billion in revenue.

The metals giant said the drop in revenue reflected "a 21% decline from divestitures, closures and market headwinds, partially offset by a 10% revenue increase from aerospace and automotive organic growth, acquisitions and Alumina sales."

Alcoa backed its earlier forecast for 2015 global aerospace sales growth of 8%-9%. In North America, Alcoa tightened 2015 estimate for auto production growth to 2%-4% from 1%-4% earlier. But for China, Alcoa cut its estimate for 2015 automotive production growth to 1%-2% from 5%-8%.

It also sees heavy-duty truck and trailer production this year falling 22%-24% from an earlier view for a 14%-16% slide. Alcoa reduced its 2015 commercial building and construction sales growth estimate to 4%-6% from 6%-8%.

Alcoa reaffirmed projections that global aluminum demand will rise 6.5% in 2015 and double between 2010 and 2020. "So far this decade, global demand growth is tracking ahead of this projection," the company said.

The company last month announced plans to split the company in two. One company will be an upstream bauxite, alumina and aluminum producer with a portfolio of manufacturing and energy assets. The second will be a value-add maker of high-performance multi-material products targeting growth markets, such as aerospace.

A day earlier, Alcoa had announced a $1.1 billion, nine-year contract with Lockheed Martin to supply titanium for the F-35 Joint Strike Fighter.

Alcoa has also inked its biggest-ever jetliner fastener supply deal, as it landed an order from European aerospace consortium Airbus to supply titanium, steel and nickel-based superalloy fastening systems.