Alcoa Says Profit Falls 54% as Energy Costs Rise (Update2)
By Dale Crofts
April 7 (Bloomberg) -- Alcoa Inc., the world's third-largest aluminum company, said first-quarter profit tumbled 54 percent because of surging energy costs, a weaker U.S. dollar and lower metals prices.
Net income fell to $303 million, or 37 cents a share, from $662 million, or 75 cents, a year earlier, New York-based Alcoa said today in an e-mailed statement. Excluding some items, profit was 44 cents a share. The company was expected to earn 50 cents, the average estimate of 14 analysts in a Bloomberg survey. Sales fell 6.7 percent to $7.38 billion.
Chief Executive Officer Alain Belda is selling less- profitable units after rising energy expenses eroded profit. Alcoa is seeking to sign long-term electricity contracts and increase the amount of cheaper hydropower it uses to match rivals including Rio Tinto Alcan.
`I think everyone knew that it was going to be a tough quarter, with lower metal prices and the U.S. dollar,'' said Scott Burns, an analyst at Morningstar Inc. in Chicago. ``Spot prices spiked toward the end of the quarter, and I'd expect things to go better for the rest of the year.''
Alcoa fell $1.56, or 4 percent, to $37.44 at 4:01 p.m. in New York Stock Exchange composite trading. Before the results were announced, the shares had gained 2.4 percent this year.
After-tax operating income fell at four of the company's five units. Profit in the primary-metals business fell 39 percent to $307 million. Alcoa said earnings in the alumina business fell 35 percent to $169 million.
Alcoa sold aluminum on average at $2,801 a metric ton during the quarter, down 3.5 percent from a year earlier. Prices have since rebounded after power cuts to smelters in South Africa and China. Aluminum for delivery in three months was trading at $2,998 a ton as of 9:26 p.m. on the London Metal Exchange.
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