Alcoa May Report Third Straight Loss on Lower Aluminum Prices

NEW YORK, July 9 -- Alcoa Inc., the largest U.S. aluminum producer, reported a second-quarter loss that was smaller than analysts' estimates after production cuts and workforce reductions helped the company save money. The shares gained.
&nbsp;&nbsp;&nbsp; The loss excluding certain items was 26 cents a share, narrower than analysts' average estimate for a 38-cent loss. The net loss of $454 million, or 47 cents a share, compared with net income of $546 million, or 66 cents, a year earlier, Alcoa said today in a statement. Sales fell 41 percent to $4.24 billion.
&nbsp;&nbsp;&nbsp; Chief Executive Officer Klaus Kleinfeld has reduced output and fired workers as the recession slows demand from builders and manufacturers. Excess production capacity and stockpiles that have risen 89 percent this year have kept aluminum's price little changed this year, compared with a 53 percent gain for copper and a 28 percent increase for nickel.
&nbsp;&nbsp;&nbsp; &quot;Cost-containment efforts were spot on,&quot; said John Stephenson, who helps manage about C$1 billion ($857 million) at First Asset Investment Management Inc. in Toronto. &quot;This is a short-term positive because aluminum is probably the most oversupplied of all the metals.&quot;
&nbsp;&nbsp;&nbsp; Alcoa rose 39 cents, or 4.1 percent, to $9.85 at 6:13 p.m. in trading after the official close of the New York Stock Exchange. The shares fell 16 percent this year before today.
&nbsp;&nbsp;&nbsp; New York-based Alcoa is the first company in the Dow Jones Industrial Average to announce results for the three months through June. The loss is the company's third straight, the first time that has happened since 1992.
&nbsp;&nbsp;&nbsp; Reduced Costs 
&nbsp;&nbsp;&nbsp; &quot;Alcoa has the staying power and reduced cost base to withstand the most serious downturn in the history of the aluminum industry,&quot; Kleinfeld said in the statement.
&nbsp;&nbsp;&nbsp; Kleinfeld said in a Bloomberg Television interview yesterday that he's betting China will lead a rebound in demand. China reverted to being a net importer of aluminum this year, buying 700,000 metric tons of the metal in the first six months, he said.
&nbsp;&nbsp;&nbsp; U.S. auto sales fell to an annual rate of 9.69 million cars and light trucks last month, from 9.9 million in May and 13.7 million in June 2008, Autodata Corp. said last week. Total sales fell 28 percent to 859,847 vehicles, the 20th straight monthly decline.
&nbsp;&nbsp;&nbsp; The U.S. government's economic stimulus-plans, including incentives for consumers to trade in older cars, will help revive aluminum demand, Kleinfeld said today on a conference call with analysts. Ford Motor Co. and Toyota Motor Corp. will lead an increase in U.S. auto output, which may rise by 1 million cars in the second half from the first six months, he said.
&nbsp;&nbsp;&nbsp; Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said yesterday. Thirty of the 50 biggest metropolitan areas have at least a 75 percent chance of lower prices through March 31, 2011, the Walnut Creek, California-based firm said in a report.
&nbsp;&nbsp;&nbsp; (Source: Bloomberg)
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