FX.co ★ Alcoa Turns To Profit In Q3, Progresses Toward Strategic Deal For San Ciprian Operations; Stock Up

In its third-quarter results, Alcoa Corp. (AA, AAI.AX) reported a marked improvement in financial performance, achieving a net income of $90 million, or $0.38 per share. This contrasts sharply with the prior year's loss of $168 million, or $0.94 per share. The company's shares closed at $42.07 on Wednesday, marking a rise of $0.77 or 1.86%. In subsequent after-hours trading, the stock climbed further by $3.63, or 8.63%.

After adjusting for special items, Alcoa's third-quarter net income stood at $135 million, or $0.57 per share, compared to a loss of $202 million, or $1.14 per share, a year earlier. Analysts surveyed by Thomson Reuters had anticipated earnings of $0.28 per share for the quarter, typically not accounting for special items. The latest-quarter adjustments excluded $45 million in net special items, notably a $31 million mark-to-market loss on energy contracts, $14 million in restructuring costs for remediation and demolition at closed sites, and a $12 million restructuring charge related to contract termination at a closed location. These were partially offset by tax and non-controlling interest impacts.

Revenue for the quarter rose to $2.90 billion from the previous year's $2.60 billion, slightly below analysts' expectations of $2.97 billion.

Production metrics showed a 4% sequential decline in alumina output to 2.44 million metric tons, mainly due to the full curtailment of the Kwinana refinery completed in June 2024. Conversely, aluminum production increased by 3% sequentially to 559,000 metric tons, driven by ongoing progress in the Alumar smelter restart.

In the Alumina segment, third-party alumina shipments fell 9% sequentially, primarily due to reduced trading activities. In the Aluminum segment, total shipments decreased by 6% sequentially as a result of decreased trading and shipment timing.

Looking ahead to the fourth quarter of 2024, Alcoa forecasts stable performance in the Aluminum Segment, maintaining third-quarter strength. The company also projects Alumina segment production to remain consistent with prior estimates at 9.8 to 10.0 million metric tons, although shipment projections have increased to between 12.9 and 13.1 million metric tons, attributed to heightened trading volumes.

For 2024, aluminum production and shipment forecasts remain unchanged, with production between 2.2 and 2.3 million metric tons and shipments ranging from 2.5 to 2.6 million metric tons.

Alcoa declared a quarterly cash dividend of $0.10 per share for both its common stock and Series A convertible preferred stock, payable on November 15, 2024, to shareholders recorded as of October 29, 2024.

In a separate announcement, Alcoa and IGNIS Equity Holdings, SL, the majority stakeholder of the IGNIS Group, a Spanish energy company, are advancing towards a strategic cooperation agreement to support Alcoa's San Ciprian operations. Under the proposed terms, Alcoa would contribute 75 million euros, while IGNIS EQT would invest an initial 25 million euros. Alcoa would continue managing the San Ciprian operations, with IGNIS EQT holding a 25% ownership stake.

Additionally, Alcoa may provide up to 100 million euros in response to operational needs, structured to ensure priority in future cash returns. Any further funding requirements would necessitate mutual agreement and be shared with Alcoa contributing 75% and IGNIS EQT 25%.