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Alcoa report reveals strong quarterly results

April 10, 2014 • Mining & Resources

Alcoa released its first quarterly performance report for 2014 on Tuesday, showing strong quarterly results offset by special items tied to restructuring as the Company’s transformation accelerates.

Logo courtesy of Alcoa Facebook page

Logo courtesy of Alcoa Facebook page

According to the news release by Alcoa, the company posted a net loss of $178 million in the first quarter of 2014, or $0.16 per share, which includes $276 million in special items largely tied to smelter and rolling mill capacity reductions. Excluding the impact of special items, net income was $98 million, or $0.09 per share.

Alcoa’s value-add businesses drove 76% of segment profits in the first quarter of 2014, with record first quarter results in Engineered Products and Solutions and a near three-fold sequential increase in profitability in Global Rolled Products.

Further, Alumina reported the best quarterly after-tax operating income (ATOI) in three years and the combined upstream segments have improved operating performance for the 10th consecutive quarter.

“We hit record downstream profitability, nearly tripled results in the midstream, and strengthened our upstream business for the 10th quarter in a row,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer.

“Our transformation is accelerating — we’re powering growth in our value-add businesses and aggressively reshaping our commodity business.”

The report showed that first quarter 2014 revenues were $5.5 billion, down 2% sequentially on lower Primary Metals third-party shipments. An 8% decline in year-over-year realized aluminium prices combined with capacity reduction in Primary Metals caused revenues to drop 6% from the first quarter 2013. Alcoa’s value-add businesses drove 58% of Alcoa’s first quarter revenues.

Sequentially, first quarter 2014 results compare to a net loss of $2.3 billion, or $2.19 per share, in fourth quarter 2013. Excluding special items, first quarter 2014 results compare to net income of $40 million, or $0.04 per share, in the sequential period.

Year-over-year, first quarter 2014 results compare to net income of $149 million, or $0.13 per share, in first quarter 2013. Excluding special items, first quarter 2014 net income compares to $121 million, or $0.11 per share, in the year-ago period when realized aluminium prices per metric ton were $193 higher.

Alcoa’s Engineered Products and Solutions segment reported a record first quarter adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin of 22.2%, compared to 20.9% in the same quarter last year. After Tax Operating Income (ATOI) was a first quarter record of $189 million, up $21 million, or 13%, sequentially and up $16 million, or 9%, year-over-year.

Global Rolled Products segment recorded an ATOI of $59 million, including a charge of $11 million related to the permanent shutdown of the Australia rolling operations. First quarter 2014 ATOI is up from $21 million in fourth quarter 2013, and down from $81 million in first quarter 2013. Adjusted EBITDA per metric ton, excluding the impact of the shutdown of the Australia rolling operations, was $342.

Alcoa’s Alumina segment posted an ATOI of $92 million in the first quarter, up $22 million sequentially, a 31% improvement, and up $34 million year-over-year, a 59% improvement, while its Primary Metals segment registered a negative ATOI of $15 million in the first quarter, up from negative $35 million sequentially, and down from $39 million in first quarter 2013.

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