Alcoa (AA) Tops Q3 EPS by 39c

Alcoa (NYSE: AA) reported Q3 EPS of $2.05, $0.39 better than the analyst estimate of $1.66. Revenue for the quarter came in at $3.1 billion versus the consensus estimate of $2.91 billion.

2021 Outlook:

Alcoa continues to expect a strong 2021 based on the continued economic recovery and increased demand for aluminum in all end markets. The Company’s Aluminum segment is forecasting double digit growth on year-over-year shipment volume of value-add products, and the Company expects annual global demand for primary aluminum to increase approximately 10 percent relative to 2020 and to surpass the pre-pandemic levels in 2019.

The Company’s 2021 shipment outlook for the Alumina and Aluminum segments remains unchanged with Alumina projected at 14.1 to 14.2 million metric tons and Aluminum expected to be 2.9 to 3.0 million metric tons.

In Bauxite, the shipment outlook is reduced by 1 million dry metric tons to between 49.0 and 50.0 million dry metric tons due primarily to reduced demand from the Alumar refinery during the unloader outage in the third quarter.

Alcoa anticipates continued positive financial results in the fourth quarter of 2021 and is well positioned to participate in strong market pricing.

The San Ciprián refining and smelting operations are expected to face significantly higher energy and raw materials costs, as well as the loss of value-add premiums while strike conditions persist. The resulting fourth quarter impact on net income attributable to Alcoa could approximate $90 million. Included in that impact is the reduction of approximately 52,000 metric tons of aluminum shipments. Additionally, working capital increase in the fourth quarter related to San Ciprián could approximate $120 million.

Beyond the San Ciprián impacts, the Company also anticipates continuing inflationary pressure on raw materials and energy.

Based on current alumina and aluminum market conditions, the Company expects fourth quarter tax expense of approximately $230 million, which may vary with market conditions and jurisdictional profitability.

The COVID-19 pandemic is ongoing, and its magnitude and duration continue to be unknown. The Company continues to take appropriate measures to protect its employees and business from the risks of the pandemic by following all appropriate health-based protocols. Uncertainty around the pandemic’s impact on the Company’s business, financial condition, operating results, and cash flows could cause actual results to differ from this outlook.

For earnings history and earnings-related data on Alcoa (AA) click here.

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