Aluminium producer Alcoa, which is cutting 15,000 jobs, reported a fourth- quarter loss last night, as the global economic crisis sent revenue plummeting on lower demand and declining metal prices.
Although Wall Street was expecting the loss, Alcoa's first in six years, it was bigger than forecast, but revenue was $700 million higher than expected, and the company's stock was little changed after-hours.
Alcoa said the loss was a result of "an historic decline in metal prices," weak end markets and almost $1 billion in restructuring, impairment and other special charges to curtail production, reduce costs and streamline its portfolio.
Last week, Alcoa announced the job losses and said it would halve capital spending and sell four businesses.
Alcoa said there was a 35 per cent decline in aluminium prices in the quarter and a sharp drop in demand, particularly from the automotive, commercial transportation and building and construction sectors.
The strike at Boeing, which uses aluminium for aircraft manufacture, had a negative $10 million impact on sequential results, Alcoa said.
"Considering they came in lower than even the lowest estimate, I can't see that that paints a good picture going forward," said Jonathan Pavlik, portfolio manager at Stewart Capital Advisors LLC in Indiana, Pennsylvania.
"It just points to conditions weakening even further from where they are already."
The net loss was $1.19 billion, or $1.49 per share, compared with earnings of $632 million, or 75 cents per share in the same quarter of 2007, the Pittsburgh-based company said.
The loss from continuing operations, which includes restructuring, impairment and other special charges of $920 million, or 88 cents per share, was $1.16 per share.
Revenue dropped to $5.7 billion from $7.0 billion, as the price of aluminium slumped. It has fallen some 50 per cent since peaking at $3,380 per tonne last July and during the fourth quarter, aluminum dropped from $2,415 on October 1st and was around $1,520 yesterday.
Reuters
