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Alcoa (AA - Free Analyst Report), a global leader in aluminum production, has reported third-quarter share earnings of $0.06, which fell shy of our $0.12 estimate and slightly below the year-ago tally of $0.07. The lower results can be attributed, in part, to a decline in aluminum prices and a generally unfavorable impact from foreign currency translations.

Some of the negatives were mitigated by higher volumes in several segments, such as Flat-Rolled Products and Engineered Products & Solutions. Restructuring initiatives, which have involved headcount reductions, also helped.

At the same time, the largest domestic aluminum producer raised its forecast for global demand, helping these shares rally a bit on the news. Indeed, Alcoa now looks for 2010 consumption to increase 13% year to year, up from its earlier outlook of 12%. This can largely be attributed to strong demand overseas in fast-growing nations like China, Brazil, and India.

At this juncture, we look for full-year 2010 share net of $0.10. This may not be the most impressive showing, as the company had generated earnings of nearly $3.00 just a few years ago, but it represents a substantial turnaround from the loss of $1.06 a share suffered in 2009.

Looking ahead, the bottom line stands to climb to $0.70 a share in 2011, though this is largely dependent on the direction of aluminum prices.

In all, Alcoa stock price was up on the news, providing a nice little reprieve for the issue. That said, these shares are still down over 20% on the year.

About The Company:  Alcoa Inc., a Pennsylvania corporation, is a global leader in the production and management of primary aluminum, fabricated aluminum, and alumina combined.  It supplies the aerospace, automotive, building and construction, commercial transportation, and industrial markets.  It has more than 300 operating and sales locations in over 35 countries.  Sales of aluminum and alumina account for more than three-fourths of Alcoa’s total revenues.  It also produces nonaluminum products, such as precision castings and fasteners for the aerospace and industrial markets.  Alcoa’s operations consist of four worldwide reportable segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions.

 

At the time of this article's writing, the author did not have positions in any of the companies mentioned.