BOSTON, Apr. 12 -- Alcoa Inc., the largest U.S. aluminum producer, may report first-quarter profit today that's 45 percent lower than analysts estimated a month ago as rising costs erode the benefit of higher metal prices.

The average estimate for Alcoa earnings excluding some items has dropped in the past four weeks to about 10 cents a share in a Bloomberg survey of 16 analysts. The company had a loss of 54 cents a year earlier and profit of 1 cent in the fourth quarter.

"We're coming out of recession, commodity prices are rising and it seems the best Alcoa can do is to just break even," Jorge Beristain, a Greenwich, Connecticut-based analyst with Deutsche Bank AG, said in an interview. He estimated on April 4 profit will be 10 cents and rates the shares "hold."

Alcoa's method of reporting costs based on the most recently purchased inventory has eaten away at profit as expenses for energy and basic materials rose, analysts said. The company isn't getting the full benefit of aluminum prices that were on average 57 percent higher in the first quarter than a year earlier, the analysts said.

Alcoa, the first Dow Jones Industrial Average company to report results for the three months through March, fell 48 cents, or 3.2 percent, to $14.39 in New York Stock Exchange composite trading on April 9. The shares have declined 11 percent this year, the worst performance in the 30-company Dow.

Lowered Expectations

"Earnings will be disappointing and will likely come in at only half of what the consensus was just a few weeks ago," Charles Bradford, a partner at New York-based Affiliated Research Group LLC, said in an interview. His break-even projection in the fourth quarter was 1 cent less than the adjusted profit Alcoa reported in January and six cents below the average estimate. Bradford projects the company earned 7 cents a share in the first quarter.

Kevin Lowery, an Alcoa spokesman, said the company couldn't comment on first-quarter results ahead of the announcement.

Two top-ranked analysts also project the average estimate for first-quarter profit still may be too high.

Citigroup Inc. analyst Brian Yu, whose recommendations on Alcoa produced the best return on the stock in the past year, reduced his first-quarter prediction to 8 cents from 10 cents in a report April 5.

JPMorgan Chase & Co. analyst Michael Gambardella, whose calls on Alcoa tied for the second-best return according to data compiled Bloomberg, slashed his estimate to 4 cents from 18 cents on April 9 while cutting his recommendation on the shares to "neutral" from "overweight." Both Yu and Gambardella declined to comment on their reports.

Inventory Costs

Inventory costs may erase "almost all" the benefit of rising metal prices, Bradford said. Alcoa's last-in, first-out accounting method added 8 cents to fourth-quarter profit, when energy and raw-material costs were falling, he said. With those costs on the rise now, there will be no such first-quarter gain, and there may be an expense, Bradford said.

Alcoa also faces higher costs from gains in foreign currencies in countries where the company has significant operations, such as Australia and Canada, as well as lower sales of aluminum sheet used to make beverage cans, Bradford said.

Analyst estimates for the first quarter exclude charges of about $200 million announced April 5. That total comprises an expense of about $120 million to shut down and demolish smelters previously idled in Maryland and North Carolina, and an $80 million charge related to tax-law changes under the U.S. health- care overhaul.

Citigroup's Yu still maintains his "buy" rating on Alcoa shares, saying that some investor disappointment with first- quarter results may have already been incorporated into the stock with the price decline in the past three months.

"Valuation is more attractive today than the $17.45 a share right before fourth-quarter earnings," Yu wrote in his April 5 report. "Our conversations with investors suggest that many recognize consensus estimates are likely optimistic."