Alcoa posted a third consecutive quarterly loss last night, but cost cuts helped the largest US aluminium maker beat Wall Street estimates by a large margin, sending its stock higher.
Chief executive Klaus Kleinfeld later told analysts there were signs that weak demand for aluminium - which has prompted production cuts and plummeting metals prices in the last nine months - might be easing.
"We still have challenging global markets, but there are some pockets of growth," he said, citing such near-term catalysts as China, production curtailments, destocking of aluminium inventories and government stimulus programs.
China will be a near-term importer of aluminium, but Beijing's stimulus programs for its own industry will eventually change the picture, he said on a conference call.
“We don't expect imports (to China) to go on forever,” he added.
The Alcoa head said that, although Alcoa still sees a 7 per cent decline in global aluminium demand this year, the company expects US car build rates to rise in the second half of 2009 as carmakers replenish low inventories.
In the beverage can sector, Alcoa expects a “reasonably stable” performance with steady US demand in the summer.
Alcoa, like other metals makers, has pared back operations and cut jobs in the face of weak prices as the poor global economy cut demand from the construction, electronics and auto sectors.
“They (Alcoa) were able to do better than expected from cost savings,” said Brian Hicks, co-manager of US Global Investors' natural resources fund. “Year-over-year production is down and down sequentially as well, but it looks like they were able to contain costs.”
Mr Kleinfeld said the company has achieved some $1 billion in procurement savings through the first half of the year, or about two-thirds of the full-year target.
Overhead savings year-to-date are around $270 million, or 134 per cent of the full year target for 2009, he said. Alcoa shares were up nearly 5 per cent at $9.92 in post market trading after closing at $9.46.
The second-quarter net loss was $454 million, or 47 cents per share, compared with earnings of $546 million, or 66 cents per share in the same quarter of 2008, the Pittsburgh-based aluminium producer said.
Reuters