PITTSBURGH – Alcoa Inc. (AA), the world's No. 1 aluminum producer, said Friday it returned to profitability in the first quarter, although earnings fell 46 percent from a year-ago as weak global demand for aluminum kept prices low.
The Pittsburgh-based company, which reported its first quarterly loss in eight years in the fourth quarter, posted net income of $218 million, or 26 cents a share. It earned $404 million, or 46 cents a share, in the first quarter last year.
This year's first-quarter results included a one-time net gain of $34 million, or 4 cents a share, related to the adoption of new accounting standards.
The consensus analyst forecast was for earnings of 22 cents a share, according to tracking firm Thomson Financial/First Call.
Revenues fell to $4.98 billion from $6.18 billion, as sales declined for the third quarter in a row.
Alcoa shares rose 1.9 percent to $37.59 in morning trading on the New York Stock Exchange on the company's return to profitability.
The company said that by the end of the quarter it had cut annual costs by $436 million and predicted it would reach its target of $1 billion in cost savings by 2003.
But the savings were not enough to overcome the drop in demand and prices.
Aluminum users are beginning to stockpile inventories to meet a projected improvement in the global economy during the second half of 2002, but analysts are uncertain whether long-term demand growth is sustainable.
Aluminum demand from Western countries fell 6 percent last year and in the U.S. market demand dropped by 12 percent, the biggest decline in more than 20 years.
Last year's manufacturing slowdown and excess inventory pushed aluminum prices in November to a 30-month low of $1,260 a metric ton on the London Metals Exchange. Kaiser Aluminum Corp., North America's No. 3 aluminum producer, filed for bankruptcy in February because of low prices and a heavy debt load.
Aluminum prices have risen 10 percent from November's low and were last trading at $1,386 a metric ton on the LME. But prices are still below levels at this time a year ago, when they were running about $100 a metric ton higher.
Shares in Alcoa have risen 10.6 percent from mid-January lows on hedge-fund buying and the expectation of increased aluminum demand.
Alcoa had a fourth-quarter loss of $142 million, or 17 cents a share, as the weak economy depressed demand and pricing, leading to a costly restructuring.