Alcoa Drops After Sales Trail Estimates as Dollar Declines

Alcoa Inc., the largest U.S. aluminum producer, fell in New York trading after reporting first-quarter sales that missed analysts’ estimates as the dollar weakened.

Alcoa declined 62 cents, or 3.5 percent, to $17.15 at 7:19 p.m. after the close of regular New York Stock Exchange trading. The company’s sales increased 22 percent to $5.96 billion from $4.89 billion a year earlier, Alcoa said today in a statement. That trailed the $6.06 billion average estimate of eight analysts in a Bloomberg survey.

Alcoa, traditionally the first company in the Dow Jones Industrial Average to report quarterly results, said its earnings were curbed by a weaker U.S. dollar, and higher energy and raw-material costs.

“The issue gets down to currency,” Chuck Bradford, president of Bradford Research, said in a telephone interview from New York. “They took a significant hit in the strong loonie, the Aussie dollar and the real.”

Alcoa operates in 31 countries, selling aluminum in U.S. dollars and paying costs in local currencies. The Canadian dollar has advanced 4.8 percent in the past 12 months against its U.S. counterpart while the Brazilian real gained 11 percent. In Australia, where the company generated 14 percent of its revenue last year, second to the U.S., the currency appreciated about 13 percent.

Profit Tops Estimates

First-quarter net income of $308 million, or 27 cents a share, compared with a loss of $201 million, or 20 cents, a year earlier, the New York-based company said in the statement. Profit excluding restructuring costs and other one-time items was 28 cents a share, topping the 27-cent average estimate of 14 analysts surveyed by Bloomberg.

Some costs for materials, such as caustic soda used in the processing of bauxite, are increasing following the earthquake and tsunami in Japan, Chief Financial Officer Chuck McLane said on a conference call to discuss the earnings.

“We are seeing increasing tightness in the Asian caustic market,” McLane said. “Due to this disruption as well as the continuing unrest in the Middle East, we expect to see higher input costs for fuel oil.”

Crude-oil prices on the New York Mercantile Exchange averaged 20 percent more in the first quarter than a year earlier.

‘Cost Control’

“They beat on the bottom line with a lower top-line number, which suggests their cost control was better than expected,” John Stephenson, a portfolio manager at First Asset Investment Management Inc. in Toronto, said in an e-mailed response to questions. “Primary metal and sheet product prices have risen since March, so second-quarter earnings should be even better.”

Aluminum prices have advanced 11 percent in the past year in London because of improving demand for the metal, which is used in construction, autos and beverage cans. Alcoa said its average realized price for aluminum rose 15 percent from a year earlier to $2,682 a metric ton.

The company reiterated its forecast that global aluminum demand will grow 12 percent this year.

“Our outlook for the rest of 2011 and beyond remains very positive,” Chief Executive Officer Klaus Kleinfeld said in the statement.