Alcoa reports profit in first quarter

New York City-based Alcoa Inc, the world's third largest producer of aluminum, behind Rio Tinto Alcan and Rusal, reported it first quarter profit amidst a cutback on aluminium smelting capacity, a move that had obviously started paying off. The company has been transitioning to higher-value products for the aerospace and automotive industries.

''The good news is, we have invested in the innovation and in the growth on the aerospace side,'' CEO Klaus Kleinfeld told analysts Wednesday during a conference call to discuss first-quarter financial results. ''And it's happening better than we expected.''

Sales of engineered products, which included aerospace and automotive businesses, made up 29 per cent of Alcoa's total revenue, up from 26 per cent a year ago. Alcoa said that engineered products were more profitable than its traditional mining and smelting business.

The company was considering boosting production of aluminum sheet and other products for automakers trying to reduce the weight of vehicles to meet stricter fuel-economy standards.

According to Kleinfeld, the company's factory in Davenport, Iowa, which was expanded to manufacture more automotive sheet used in car and truck bodies, was running at full capacity.        

Analysts had expected Alcoa's earnings at 26 cents per share on $5.94 billion revenue. After initially remaining unchanged, the company's shares declined 3 per cent in after-hours trading following the earnings release.

"When you lift the hood on the profit side, you see a record performance on the upstream side," Klaus Kleinfeld, Alcoa's chairman and CEO, told CNBC. "Again, super, super good first quarter. And you see a very, very good performance on the downstream side."

According to Klenifeld, the growth was driven by strong organic gains in Alcoa's automotive and aerospace businesses. He emphasised that his firm remained committed to its reorientation endeavors.

"First quarter results show our transformation is moving at ongoing high speed and is fully on course," Kleinfeld said in the earnings release. "We are organically and inorganically broadening our innovative, multi-material value-add businesses, bringing new capabilities and materials to our aerospace and automotive offerings, and taking swift action in the upstream, making it more competitive. "We are pulling on all levers to create sustainable shareholder value," he added in the release.