Increasing demand revives Alcoa's fortunes

Alcoa said that demand for lighter, fuel-efficient vehicles and aircraft would continue to stoke its revival, even as oil prices slid making transport cheaper, The Sydney Morning Herald reported.

The aluminium producer posted a better than expected set of quarterly results for the fourth time in a row this morning, driving the US company to its best operating results in seven years.

The results sent shares of its Australian joint venture partner Alumina Limited to a 41-month high.

Following a difficult spell over a numbers of yeas in an over-supplied market, Alcoa had enjoyed improving prices for bauxite and alumina, and improved premiums on aluminium sales in 2014, which led to a 56 per cent increase in its share price over the past year.

Net income, which came in at $268 million for 2014 marked an improvement on the $2.28 billion loss in 2013, and according to demand forecasts the recovery would continue.

According to projections of chief executive Klaus Kleinfeld demand for the company's products from the aerospace sector would rise by as much as 10 per cent in 2015, even as demand from the building and automotive sectors was expected to rise as much as 7 per cent and 4 per cent respectively.

Meanwhile, The Australian reported that the New York-based aluminium firm, typically the first major US firm to report earnings each quarter, had benefited from past efforts to close unprofitable smelters in high-cost areas.

Thanks to a combination of stronger aluminium pricing as also investments in new aerospace and automotive products and better productivity Alcoa had seen its performance rebound to a profit of $268 million for 2014, from a loss of $2.3 billion in 2013.

The quarter saw Alcoa complete the sales of a number of its plants and as also the acquisition of jet-engine parts maker Firth Rixson, part of the company's efforts to cut exposure to volatile commodities prices.

The latest quarter saw Alcoa's primary metals income at $267 million, as against a year-earlier loss of $35 million. Third-party realised prices, or the amount Alcoa received from customers, increased 20 per cent from a year earlier to $2,578 per tonne.

Overall, Alcoa's profit came in at $159 million, or 11c a share, as against a year-earlier loss of $2.34 billion, or $2.19 a share.