Signs that Alcoa benefited from more sales of aluminum at higher prices as it coped with rising energy and raw materials costs. Some of its customers were also affected by the aftermath of Japan's earthquake and tsunami in March.
The aluminum manufacturing giant, based in Pittsburgh, has seen steady gains in sales as business has improved for key customers such as the aerospace, automobile and industrial gas turbine industries. For the year, it has forecast a 12 percent increase in global aluminum demand.
The March crisis in Japan caused a disruption in the flow of parts for a number of industries that Alcoa serves but that appears to be easing. U.S. businesses ordered more airplanes, autos and oil-drilling equipment in May after a sluggish spring, and June auto sales rose 7 percent.
Aluminum prices also improved during the quarter. Dahlman Rose & Co. analyst Anthony Rizzuto expects Alcoa to report a 6-cent-per-pound increase in the average realized price for aluminum.
WHY IT MATTERS: Alcoa's performance can reflect economic trends because its products reach across a broad range of businesses. Its customer base includes automobile, trucking and aerospace industries, consumer products and construction. Nearly 80 percent of its sales are in the U.S. and Europe.
WHAT'S EXPECTED: Analysts surveyed by FactSet forecast earnings of 34 cents a share on sales of $6.3 billion.
In a recent note to clients, JPMorgan analyst Michael F. Gambardella said he expects to see improvement in production, but most of the benefit likely will be offset by higher costs for raw materials such as fuel oil and caustic soda.
Rizzuto predicted sales will be better than a year ago based on higher prices for aluminum and volume. He also said he expects Alcoa to maintain its guidance on global demand.
LAST YEAR'S QUARTER: Alcoa reported net income of $136 million, or 13 cents share. Revenue totaled $5.19 billion. Shares of Alcoa ended the quarter at $15.86, down from $17.66 on March 31.
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