Alcoa's profit beat fueled by rising alumina prices, shares rise
(Adds CEO quote from conference call, analyst comment, tariff
impact; updates shares)
By Sanjana Shivdas
Oct 17 (Reuters) - Top U.S. aluminum producer Alcoa Corp
reported a better-than-expected quarterly profit on
Wednesday, as a series of supply hits boosted alumina prices.
Shares of the company rose almost 5 percent to $38.49 in
after-hours trading, also helped by the announcement of a $200
million share repurchase program.
Alumina prices spiked during the year, largely due to supply
disruptions such as lower production at Norsk Hydro's
Alunorte, the world's largest alumina refinery, a strike at
Alcoa's Australian operations and U.S. sanctions on Russian
aluminum giant Rusal.
Chief Executive Roy Harvey said on a post-earnings call with
analysts that while increased alumina prices represented an
added cost, the company benefited from strength in third-party
Third-party alumina sales, or supplies to other smelters,
surged 54.4 percent to $1.10 billion in the third quarter, the
Alcoa said it had a net benefit of $27 million in the third
quarter from U.S. tariffs as they helped push up the Midwest
President Donald Trump in March imposed tariffs on imported
aluminum aimed at boosting domestic aluminum makers against the
backdrop of overcapacity in China.
The tariffs, which came into force in June, also extended to
products from allies such as the European Union and Canada.
Alcoa in August asked the U.S. Commerce Department to exempt
from tariffs its purchases of 40,000 metric tons of aluminum
from Canada, and is awaiting the government's response.
Excluding certain items, Alcoa earned 63 cents per share,
easily topping expectation of 36 cents, according to I/B/E/S
data from Refinitiv.
Peter Ward, an analyst at Renaissance Macro Research, said
the quarter was "okay" given the competitive challenges in the
market. "The Street had recently cut estimates way too much."
The company tightened its 2018 adjusted earnings before
interest, tax, depreciation and amortization (EBITDA) forecast
to range between $3.1 billion and $3.2 billion, raising its
midpoint slightly, compared with its previous expectation of
$3.0 billion and $3.2 billion.
Net loss attributable to Alcoa was $41 million, or 22 cents
per share, in the third quarter ended Sept. 30, compared with a
profit of $113 million, or 60 cents per share, a year earlier.
The results include a charge of $160 million mainly from the
transfer of certain of the company's U.S. pension and retirement
Revenue rose 14.4 percent to $3.39 billion, topping
analysts' average estimate of $3.31 billion.
(Reporting by Sanjana Shivdas in Bengaluru; Additional
reporting by Vibhuti Sharma in Bengaluru; Editing by Sriraj
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