Alcoa Inc (AA) Shares Decline on Earnings Miss

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The stock price of Alcoa (NYSE: AA) declined more than 5% to $10.50 per share after the aluminum giant reported second-quarter earnings that missed the consensus estimate of Wall Street analysts.

Alcoa financial results

Alcoa generated earnings of $0.19 per share (excluding special items) for the second quarter, lower than the $0.22 per share expected by analysts.

Its revenue was $5.9 billion, higher than the $5.81 billion consensus estimate.  The company said its revenue was primarily driven by strong organic growth in its aerospace, automotive and alumina businesses.

According to Alcoa, its after-tax operating income (ATOI) from primary metals business was $67 million, down from $97 million during the same period last year.

The ATOI from its alumina business increased $177 million to $215 million year-over-year; engineered products and solutions climbed $8 million to $210 million, and global rolled products increase $6 million to $76 million year-over-year.

Alcoa ended the quarter with $205 million free cash flow, and it has $1.3 billion cash on hand. Yesterday, the company extended the maturity date of its $4 billion revolving credit line to July 2024.

Alcoa continues to transform its portfolio

In a statement, Alcoa Chairman and CEO Klaus Kleinfield said the company continues to transform its portfolio. He said, the company’s “portfolio reshaping combined with smart investments in growth markets is delivering strong results.”

“Our value-add businesses are outperforming, with record profitability in the downstream and exciting profitable growth in the midstream. Recent acquisitions are fully on track, and paired with our innovations; we are cementing Alcoa’s position as a premier aerospace and automotive partner,” added Kleinfield.

Since 2007, Alcoa closed approximately 39% of its alumina smelting capacity. The company shut down its high-cost plants from Australia to Texas.

The company is acquiring RTI International Metals as part of its transformation efforts. Alcoa already received regulatory approvals in Europe and United States, and its shareholders are scheduled to vote on the deal on July 21.

RTI International Metals is expected to boost Alcoa’s multi-material product suite to meet the growing demand for titanium in the aerospace sector.