Alcoa profit drops as aluminium prices tumble
Alcoa Inc reported a drop in first-quarter profit on Monday as low aluminium prices sent revenue tumbling 15 per cent.
The company's profit, however, beat Wall Street expectations as it performed well in making lightweight-alloy products for airplanes and autos.
Alcoa said it cut 600 jobs in the first quarter to reduce costs, planned to eliminate another 400 and said that "given the current market environment" it is considering cutting up to 1,000 more jobs. It began 2016 with about 60,000 employees.
Alcoa has long been the unofficial opening act for earnings season, and this one could be rocky. Analysts expect first-quarter earnings per share by the S&P 500 companies will be more than eight per cent lower than a year ago, according to FactSet and S&P Global Market Intelligence, with much of the drag coming from energy companies.
Alcoa said net income was US$16 million, or less than a penny per share, down from US$195 million a year earlier. Excluding costs related to its impending split into two companies, Alcoa said it would have earned seven cents per share.
Wall Street expected adjusted earnings of two cents per share, according to a FactSet survey of 13 analysts and a Zacks Investment Research poll of six analysts.
Revenue dropped to US$4.95 billion, even lower than the 11 per cent drop to US$5.2 billion that analysts in the FactSet survey expected.
New York-based Alcoa said it remained on track to split later this year into two publicly traded companies. One will keep the Alcoa name and its mining and smelting business. Those divisions have been hurt by stubbornly low prices for aluminium and competition from overproduction and exports from China.
The other company will be called Arconic and take the faster-growing segments that make products for aerospace, autos, construction and other industries.