NEW YORK Analysts
anticipate Alcoa Inc. will kick off the earnings season with
improved results over the prior quarter, largely due to a
4-percent uptick in the price of aluminum on the London Metal
"Aluminum prices were higher
sequentially. LME cash averaged $2,001 per tonne in the fourth
quarter vs. $1,920 per tonne in the third (quarter). That will
be enough to offset some very small headwinds from seasonal
weakness in the downstream business and currencies," Tim Hayes,
analyst at Richmond, Va.-based Davenport & Co. LLC, told
Davenport & Co. and Barclays
Capital Plc estimate Alcoa will report net income of 7 cents
per share. Meanwhile, Dahlman Rose & Co. LLC, New York, is
forecasting 10 cents; New York-based Jefferies & Co. Inc.,
6 cents; and Frances Crédit Agricole SA, 5
In the third quarter,
Pittsburgh-based Alcoa reported a net loss of 13 cents per
share, while in the fourth quarter of 2011 it recorded an
A second analyst agreed that the
LME price increase should overshadow typical seasonal weakness.
"I think the fourth quarter was a little worse for the
downstream business, mostly because of seasonality but also
because Europes still weak. Its not much though,"
he said, estimating earnings at slightly above 6 cents per
Not all analysts agree, however.
Leo Larkin, equity research analyst at New York-based Standard
& Poors, said the rise in the LME aluminum price was
too late in the quarter to have a significant impact on
Alcoas earnings. He sees the producer breaking even in
the fourth quarter.
A general consensus of 6 cents
per share "may be right but there can be a lag, and the
direction of the price was only positive in December," he said.
"Considering how weak everything else seemed to be and how
static the global economy was, (I think) people put more weight
on (the LME price) than they should."
But Alcoa could revise its
global aluminum demand numbers in its earnings results Tuesday.
"I wouldnt be surprised if they cut their estimate for
global aluminum demand growth for 2012 from 6 percent to 5
percent," Hayes said. "They may also revise their view of the
market balance (and) cut their deficit numbers. I dont
know if theyll put markets into a surplus, but it will be
closer to being in balance."