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Alcoa Corp.’s first full quarter as a standalone company vindicates investors’ faith and signals even better times may be ahead.
Profit excluding one-time items was 63 cents a share, New York-based Alcoa reported after the close of regular trading Monday, exceeding all seven estimates of analysts tracked by Bloomberg. Shares jumped as much as 7.1 per cent on Tuesday.
Shares have surged since the company separated from its jet– and car-parts business in November, helped by a jump in aluminum prices. Investors have also rewarded Alcoa for its thrift, as Chief Executive Officer Roy Harvey merges units and drives efforts to simplify operations. The results come as Arconic Inc., the downstream business that split from Alcoa, contends with a proxy battle fueled in part by concern over corporate spending.
“They’re going to be very aggressive on cost-cutting,” Lloyd O’Carroll, an independent analyst in Richmond, Virginia, said in a telephone interview. Alcoa “can move a lot faster since the split,” he said. “Now this is their gig and they’ve got the bit in the teeth.” Since Nov. 1, when Alcoa started trading separately, shares have gained more than 50 per cent.
For 2017, Alcoa is projecting global aluminum demand growth of 4.5 to 5 per cent over 2016, higher than it forecast in January. The company continues to see relatively balanced global bauxite and alumina markets and a global aluminum surplus of 300,000 to 700,000 metric tons.
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