Alcoa Beats Q3 EPS Expectations, Rides Alumina Price Surge Despite Production Hiccups

Benzinga · 10/17 10:50

Alcoa Corporation (NYSE:AA) shares are trading higher on premarket Thursday. On Wednesday, the company reported third quarter sales of $2.904 billion, missing the consensus of $2.967 billion.

Alumina production dropped 4% sequentially to 2.44 million metric tons, mainly due to the full curtailment of the Kwinana refinery in June 2024.

Meanwhile, aluminum production rose 3% sequentially to 559,000 metric tons, driven by progress on the Alumar smelter restart.

In the Alumina segment, third-party shipments dropped 9% sequentially, mainly due to reduced trading activity.

In the Aluminum segment, total shipments fell 6% on a sequential basis, owing to lower trading and shipment timing.

Adjusted EBITDA, excluding special items, rose to $455 million from $325 million in the second quarter thanks to higher alumina prices and lower raw material costs.

Adjusted EPS of $0.57 exceeded the consensus of $0.28.

The company ended the third quarter of 2024 with a cash balance of $1.3 billion.

Dividend: The Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on November 15 to stockholders of record as of October 29.

Outlook: Alcoa maintains its 2024 Alumina segment production forecast at 9.8 to 10 million metric tons while increasing its shipment projection to 12.9 to 13.1 million metric tons, up by 0.2 million metric tons from the prior forecast due to higher trading volumes.

This gap between production and shipments is attributed to the use of externally sourced alumina to meet contracts following the Kwinana refinery curtailment.

Aluminum segment production and shipment estimates remain unchanged, with production expected between 2.2 and 2.3 million metric tons, and shipments between 2.5 and 2.6 million metric tons.

In fourth quarter, Alumina Segment Adjusted EBITDA is expected to see a $30 million sequential benefit from higher shipments and lower costs, while the Aluminum Segment is anticipated to perform flat, maintaining the third quarter levels.

Alcoa President and CEO William F. Oplinger said, ”We gained flexibility after closing the Alumina Limited acquisition and announced the sale of our interest in the Ma’aden joint ventures.”

“Positive markets and our focus on continuous improvement led to stronger results for the third quarter, while we continue to execute initiatives to further enhance our operations.”

In a separate release, Alcoa and IGNIS Equity Holding disclosed plans to move forward with a strategic cooperation agreement.

The partnership aims to support the ongoing operation of Alcoa’s San Ciprián facilities.

This week, the company announced a long-term agreement to supply Aluminium Bahrain B.S.C. (Alba) with up to 16.5 million tonnes of smelter-grade alumina over the next ten years.

Investors can gain exposure to the stock via Macquarie ETF Trust Macquarie Energy Transition ETF (NYSE:PWER) and SPDR S&P Metals & Mining ETF (NYSE:XME).

Price Action: AA shares are up 5.18% at $44.25 premarket at the last check Thursday.

Photo via Shutterstock

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