Alcoa Q4 profit seen strong on rising demand

Reuters reported that the aluminum industry has struggled for two years since the recession, but demand and prices have started to rise and one of the metal biggest producers, Alcoa Inc is poised to start growing in profitability.

After small profits in recent quarters, Wall Street expects Alcoa to post healthier results when it kicks off the US earnings season on Monday.

Analysts on average expect Alcoa to post a Q4 profit of 19 cents a share up from 1 cent a share a year earlier. Revenue is seen rising to USD 5.68 billion from USD 5.43 billion.

Analyst Ms Bridget Freas of Morningstar Inc said "When people look at Alcoa, they usually look at the price of the metal. She said "But the company has been doing a lot of things under the radar lots of cost-cutting, and they have cleaned out their downstream businesses. They are positioned for a strong year."

Recently Alcoa said it would restart three idled aluminum smelters in the United States in the first half of 2011, raising its output to meet growing global demand for the metal. The restarted facilities will increase Alcoa`s aluminum production by 137,000 tonnes over the course of 2011 and by 200,000 tonnes on an annual basis thereafter.

Deutsche Bank analyst Mr Jorge Beristain said Alcoa has turned the corner from an operational point of view. He upgraded his investment rating and raised his share-price target on an expected increase in aluminum prices.

Mr Lloyd O'Carroll of Davenport & Co raised his 2011 and 2012 earnings estimates for the company. He said "Higher prices are expected as industry fundamentals are improving."

Aluminum prices which slump dramatically during the recession rose by 11% last year 5% in the fourth quarter alone and are now near a two year peak of USD 2,500 per tonne.

（Sourced from Reuters）