Alcoa Inc (NYSE:AA) stunned the market with third quarter 2014 earnings surpassing the market estimates primarily because of lower operating costs and higher aluminum prices. The positive result from Aluminum Company is one of the first from S&P 500 companies to announce its quarterly results and hint towards the improvement of the U.S economy. CEO and Chairman of the company, Klaus Kleinfeld, believes that this result has been achieved by repositioning their portfolio.
Alcoa Inc (NYSE:AA) reported net revenues of $6.2 billion for third quarter 2014 with an 8% increase from the same quarter last year and 7% higher than its second quarter 2014 results. The company reported net income of $149 million from the quarter and on excluding special items, its net income was $370 million. The engineered products and solutions was the key for these grand results considering its highest after-tax operating income of $209 million. Productivity gains were $306 million on YoY basis and the company forecasts nearly 7% global growth in the demand of aluminum during fiscal 2014.
Klaus Kleinfeld, CEO and chairman of Alcoa Inc (NYSE:AA), said,
“This quarter is a clear data point that Alcoa’s transformation is delivering. Our downstream business again achieved historically high profitability, the midstream maintained disciplined cost control while capturing growth, and Primary Metals performed at levels not seen since before the downturn. This strong quarter is the direct result of our intense focus on repositioning our portfolio, and we’re just hitting our stride.”
The stocks of Alcoa are up 50% this year easily outpacing the market average and its stock reached $16.42 in after-hours trading with 2-percent increase in share prices. The company has been cutting down its high cost operations including smelting capacity considering the expansion of Saudi Arabian Mining Co 1211.SE, its joint venture, and Kleinfeld further added that the venture is already profitable. He further indicated cost cutting measures in progress when asked about further closure of smelting capacity adding, “We are not done yet.”
This article has been written by Prakash Pandey.