BOSTON, Jan. 11 -- Alcoa Inc., the largest U.S. aluminum producer, may report a profit today after a year- earlier loss, benefiting from higher metal prices as the global economy recovers.
Alcoa may report fourth-quarter earnings, excluding some items, of 6 cents a share, the average estimate of 16 analysts surveyed by Bloomberg. The profit would be the second straight after three quarters of losses. Sales are estimated, on average, to rise 2.7 percent to $4.8 billion.
The U.S. economy, the world's largest, expanded at a 2.2 percent pace from July through September after a yearlong contraction that was the worst since the 1930s. That helped boost the price of aluminum for delivery in three months on the London Metal Exchange by 18 percent in the fourth quarter to end the year at $2,230 a ton.
"The price of aluminum has been trending higher because it does seem like the demand side of the story has definitely improved," Rick de los Reyes, a Baltimore-based analyst with T. Rowe Price, said in a Jan. 5 interview. "The main thing is to continue to see Alcoa moving in the right direction rather than having a blowout earnings quarter, which I don't think they will."
T. Rowe Price held 16.3 million shares of Alcoa at the end of September, or about 1.7 percent of the shares outstanding, making it the company's eighth-largest shareholder, according to Bloomberg data.
Alcoa, the first company in the Dow Jones Industrial Average to report results for the three months through December, rose 41 cents, or 2.5 percent, to $17.02 on Jan. 8 in New York Stock Exchange composite trading. The shares gained 43 percent in 2009.
Alcoa's realized aluminum prices trail those on the London futures exchange and may have gained about 7 percent in the quarter, Deutsche Bank AG analyst Jorge Beristain estimated in a Jan. 5 interview. He rates the shares "buy" and doesn't own any. Even with stronger metal prices, results for the quarter may be constrained by higher energy prices and costs to start new facilities in Brazil, he said.
"The company in the first three quarters of last year experienced a nice unit-cost tailwind," Beristain said. "They were benefiting from the fact that input costs, which collapsed in the fourth quarter of 2008, stayed low. Now what you are starting to pay for in the fourth quarter of 2009 is increases of some of these things that started in the third quarter."
Analysts' estimates for the fourth quarter exclude a charge of $300 million to $500 million that Alcoa announced in November to idle two smelters in Italy, which may result in a net loss for the period, Beristain said. Alcoa is shutting down the smelters while appealing a European Commission ruling that special electricity tariffs the company received there didn't comply with state-aid rules.