Al­coa low­ers forecast, com­pany to split month end

Jamaica Gleaner - - BUSINESS -

AL­COA INC, which is post­ing its last quar­terly earn­ings re­port be­fore its split into two com­pa­nies, an­nounced softer-than-ex­pected third-quar­ter re­sults, stung partly by lower alu­mina prices.

The com­pany also low­ered rev­enue fore­casts for some seg­ments of Ar­conic, which will be­come the new com­pany.

Al­coa Inc has been on a long quest to shrink its alu­minium-smelt­ing business, which has been hurt by stub­bornly low prices. The com­pany is split­ting that seg­ment off and cre­at­ing a new pub­lic com­pany to make and sell spe­cial­ity light­weight prod­ucts for aero­space, au­tos and other in­dus­tries.

The sep­a­ra­tion will see Al­coa Inc re­named Ar­conic Inc, whose busi­nesses will in­clude global rolled prod­ucts, en­gi­neered prod­ucts and trans­porta­tion and con­struc­tion so­lu­tions; and the cre­ation of another com­pany called Al­coa Cor­po­ra­tion, which will cap­ture the baux­ite, alu­mina and alu­minium op­er­a­tions.

Al­coa said Tues­day that the sep­a­ra­tion is set to take ef­fect be­fore the market open on Novem­ber 1. Klaus Kle­in­feld will serve as Ar­conic’s chair­man and CEO, while Michael Mor­ris will be the non-ex­ec­u­tive chair­man of Al­coa Cor­po­ra­tion and Roy Har­vey will be CEO. Mor­ris has been a direc­tor of Al­coa since 2008 while Har­vey is cur­rently the group pres­i­dent of Al­coa Global Pri­mary Prod­ucts.

Ar­conic will hold a 19.9 per cent stake in Al­coa Corp. Both com­pa­nies will trade on the New York Stock Ex­change.

For the pe­riod ended Septem­ber 30, the com­pany earned US$166 mil­lion, or 33 cents per share. A year ear­lier Al­coa earned US$44 mil­lion, or six cents per share.

Strip­ping out cer­tain items, earn­ings were 32 cents per share. That’s a penny be­low what an­a­lysts polled by Fac­tSet were look­ing for.

Rev­enue dropped to US$5.21 bil­lion from US$5.57 bil­lion, as ship­ments of alu­minium prod­ucts de­clined. An­a­lysts were call­ing for rev­enue of US$5.33 bil­lion, ac­cord­ing to a Fac­tSet survey.

Al­coa’s re­sults are watched closely as a barom­e­ter of the econ­omy be­cause its prod­ucts are used in so many in­dus­tries.

Al­coa said that it now fore­sees full-year rev­enue in a range of US$4.8 bil­lion to US$5 bil­lion for global rolled prod­ucts. That’s down from its prior guid­ance of US$5 bil­lion to US$5.2 bil­lion.

For en­gi­neered prod­ucts and so­lu­tions, Al­coa now an­tic­i­pates full-year rev­enue be­tween US$5.6 bil­lion and US$5.8 bil­lion. Its pre­vi­ous out­look was for US$5.9 bil­lion to US$6.1 bil­lion in rev­enue.

The com­pany now ex­pects US$1.7 bil­lion to US$1.8 bil­lion in rev­enue for the year for trans­porta­tion and con­struc­tion so­lu­tions. It pre­vi­ously pre­dicted US$2.1 bil­lion in rev­enue. The seg­ments are all part of Ar­conic. In this file photo, fin­shed rolls of alu­minium as they come off the last stage of the pro­duc­tion line at an Al­coa plant. Alu­minium will now fall un­der split-off com­pany Al­coa Corp.

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