Alcoa Q4 net up to $258 mil from $277 mil Q4 2009 loss

Washington （Platts）--10Jan2011   US-based Alcoa attributed its return to the black in Q4 earnings to higher pricing, continued strengthening in most end markets and improved productivity. The aluminum major posted a fourth-quarter net attributable income of $258 million （25 cents/share）, compared with a net loss of $277 million （28 cents/share） in the corresponding 2009 period, the company said Monday.

Results were offset somewhat by a weaker US dollar and higher energy and raw material costs.

Fourth-quarter revenues rose 4% year-on-year to $5.7 billion from $5.4 billion in Q4 2009 and also showed a 7% gain over the third quarter. The increase was driven by an improvement in realized pricing for both alumina （9%） and aluminum （11%） as well as continued strengthening in most end markets, said Alcoa.

Full-year net attributable earnings rose to $254 million （25 cents/share） from a net attributable loss of $1.15 billion （$1.23/share） in 2009.

Full-year 2010 sales rose to $21 billion from $18.4 billion in 2009.

Q4 results beat analysts' expectations of 19 cents/share, while the full year result fell short of analysts' expectations of 53 cents/share.

"We exceeded all of our targets and continued to build momentum," said Klaus Kleinfeld, Alcoa Chairman and CEO. "We delivered all-time record cash from operations, record fourth-quarter free cash flow, improved earnings, grew revenue and paid down debt."

Alcoa expects global aluminum demand to grow another 12% in 2011 on top of 2010's 13% growth, it said Monday. For 2011, the company projects growth in all end markets on a global basis.

Alcoa projects global demand for aluminum to double by 2020. "We are well positioned to outpace the recovery in the markets we serve and grow shareholder value," said Kleinfeld.

Third-party shipments of aluminum were essentially flat compared with the third quarter of 2010. End-market revenue performance improved over the third quarter in aerospace （up 4%）, building and construction （up 2%）, distribution （up 13%） and industrial gas turbines （up 16%）.

Alcoa's alumina segment posted an after-tax operating income in the fourth quarter of $65 million, a decrease of $5 million compared with third-quarter ATOI of $70 million. A 9% improvement in realized alumina prices was partially offset by negative currency impacts, higher raw material costs and continuing Sao Luis, Brazil, production recovery efforts.

Primary metals ATOI in the fourth quarter was $178 million, an increase of $100 million versus third-quarter ATOI of $78 million. Improved London Metal Exchange prices, volume and productivity were partially offset by unfavorable currency and cost increases in energy and carbon product prices.

The flat-rolled sector saw ATOI in the fourth quarter of $53 million, a decrease of $13 million compared with third-quarter ATOI of $66 million. Seasonal volume declines in North America and Europe as well as scrap and alloying cost pressures accounted for the decline, although improving prices helped to offset these effects. Russia remained profitable for the third consecutive quarter, with $130 million of improved ATOI over 2009.

In engineered products and solutions, ATOI in the fourth quarter was $113 million, essentially flat with third-quarter ATOI of $114 million. Adjusted EBITDA margin remained at 17%, 6% better than the fourth quarter of 2009. Seasonal shutdowns and weather delays impacted the fourth quarter's results, although the segment achieved improved sequential revenues due to volume improvements in aerospace and commercial transportation.

--staff reports, newsdesk@platts.com