Alcoa Profit Tops Estimates as Aluminum Demand Grows

Alcoa Inc., the largest U.S. aluminum producer, reported third-quarter profit that topped analysts’ estimates and raised its 2010 global consumption forecast to a 13 percent increase on higher demand in China, Brazil and India.

Earnings excluding certain items were 9 cents a share, topping the 5-cent average estimate of 16 analysts surveyed by Bloomberg. Net income fell to $61 million, or 6 cents a share, from $77 million, or 8 cents, a year earlier, New York-based Alcoa said today in a statement. Sales climbed 15 percent to $5.3 billion.

“Russia and China were strong,” John Stephenson, who helps manage C$1.65 billion （$1.62 billion） at First Asset Investment Management Inc. in Toronto, said in an e-mail. “This is a solid beat.”

Alcoa’s sales of aluminum for use in heavy trucks and trailers will grow 35 percent to 40 percent this year, Chief Executive Officer Klaus Kleinfeld said on a conference call. Aerospace will increase 2 percent to 4 percent and automotive as much as 8 percent, he said.

Alcoa, the first company in the Dow Jones Industrial Average to announce quarterly earnings, rose 34 cents, or 2.8 percent, to $12.54 as of 7:59 p.m. after the close of regular trading on the New York Stock Exchange.

Aluminum for delivery in three months on the London Metal Exchange averaged 15 percent higher in the third quarter than a year earlier while global inventories fell 3.3 percent. A weaker dollar improved the affordability of commodities in countries with stronger currencies, said Anthony Rizzuto, a New York-based analyst at Dahlman Rose & Co.

Alumina Refining

The company raised its forecast for the rate of growth in aluminum demand from 12 percent previously.

“In countries such as China, Brazil, India and Russia, more and more people are moving into the middle class, driving demand,” Kleinfeld said in the statement.

Alcoa smelts aluminum and refines alumina, a raw material used to make the metal, in Australia, Europe and Brazil. The Australian dollar climbed 15 percent against its U.S. counterpart in the third quarter, the second-largest gain among a basket of 16 major currencies tracked by Bloomberg. The euro was third, strengthening 11 percent, while the Brazilian real climbed 7 percent.

Chinese Cuts

Alcoa loses $75 million of annual net income for every 10 percent increase in the Australian dollar, the company said in a presentation today. It also said it loses $40 million for a 10 percent increase in the euro.

Alcoa also may see higher demand because some Chinese aluminum smelters have been ordered to cut production to meet energy-usage requirements, said Charles Bradford, a partner at Affiliated Research Group LLC, a New York-based consulting firm.

Aluminum prices on the LME averaged $2,110 a metric ton in the third quarter compared with $1,836 a year earlier. Global stockpiles monitored by the LME, the world’s largest metals bourse, fell 0.1 percent to 4.34 million tons today.