NEW YORK Weaker aluminum prices on the London Metal Exchange and lower sales volumes weighed on Alcoa Inc.s revenue in the first quarter, but productivity improvements and a more favorable value-added product mix helped to boost the companys net income compared with the same period last year.
"This was a strong quarter led by record profitability in our downstream business, improved results in our midstream business and remarkable upstream performance in the face of weak metal prices," Klaus Kleinfeld, Alcoas chairman and chief executive officer, said in a statement.
The Pittsburgh-based aluminum producer posted net income of $149 million for the three months ended March 31, up 58.5 percent from $94 million a year earlier but down 38.4 percent from $242 million in the final three months of 2012. Sales were down 2.9 percent from a year earlier and 1.1 percent from the previous quarter to $5.83 billion.
Alcoas latest results included an income tax benefit, the positive impact of mark-to-market changes on some energy contracts and an insurance recovery related to a March 2012 fire in Massena, N.Y. (amm.com, March 30), the company said.
Alcoas shipments totaled 1.224 million tonnes in the first quarter, down 5.5 percent from 1.295 million tonnes in the same quarter last year and 4.4 percent below 1.280 million tonnes in the fourth quarter.
Alcoa largely attributed the dip in revenue to lower LME aluminum prices and the impact of curtailments at some of its European primary operations. LME cash aluminum prices averaged $1,912.78 per tonne last month, marking a return to lows last reported in August.
But although commodity prices have taken a hit recently, Alcoa maintains the aluminum industry will grow this year, executive vice president and chief financial officer William Oplinger said in a conference call following the release of the companys earnings report. "Money has been thrown into equities and out of commodities, driving down commodity prices, and aluminum is no exception," he said.
However, Alcoa argues that the underlying fundamentals for the aluminum market have not changed, reiterating April 8 that aluminum demand will still grow 7 percent this year on the back of strong automotive and aerospace markets and tightening supply.