What led to the Volatility: Alcoa Corp (NYSE: AA) stock fell over 1.6% in the pre market session on January 16th, 2019 (Source: Google finance). Pittsburgh-based Alcoa has reaped mixed benefits from President Donald Trump’s decision to impose tariffs on aluminum and steel imports into the United States. The company has been hit by imports from its smelter in Canada. The Aluminum segment was down $126 million, primarily on lower metal prices and lower earnings from our Brazil hydro assets. Higher alumina costs continued to flow through the segment, which offset the volume gains from the business.
Financials Overview: Net income attributable to Alcoa was $43 million in the quarter ended Dec. 31, compared with a loss of $196 million a year earlier. Compared to 2017, the company grew revenue and net income, and the company increased adjusted EBITDA, excluding special items, by 27%, reaching $3.1 billion. The company reduced the pension and OPEB net liabilities by a third, enhancing the balance sheet, all while maintaining a healthy cash balance.
AA in the fourth quarter of FY 18 has reported the adjusted earnings per share of 66 cents, beating the analysts’ estimates for the adjusted earnings per share of 50 cents, according to I/B/E/S data from Refinitiv. The company had reported the adjusted revenue growth of 5.4 percent to $3.34 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $2.47 billion. Strong sales of alumina to third-party smelters, which jumped 20.8 percent to $1.13 billion, helped the company counter a fall in aluminum prices. Alumina adjusted EBITDA improved $23 million. Strong production recovery and higher API prices were offset by the favorable pricing true-ups from last quarter turning negative this quarter. Special items in the quarter totaled $82 million after tax and noncontrolling interests. Of the $138 million of restructuring before tax and noncontrolling interests, $107 million was to establish an allowance on Brazil state VAT credits.
Alcoa, which is shuttering two of its aluminum plants in Spain, said it expected an annual net income improvement of $70 million to $80 million beginning in the third quarter of 2019 from the closures.
The company said it expected an alumina surplus in China in 2019, driven by refinery expansions and lower-than-expected smelting production. Alcoa said it expected the global aluminum deficit to extend into 2019 and estimated that its aluminum shipments would decline 500,000 to 600,000 tons year over year.