Alcoa Inc. share price up, Q4 profit beats estimates on increased aluminum demand

The biggest aluminum producer in the U.S. – Alcoa Inc. – announced better-than-expected earnings and sales over the fourth fiscal quarter due to rising demand for the metal from the auto and aerospace industries.

The Chief Executive Officer of the company – Mr. Klaus Kleinfeld – shared that the regional premiums that are paid for physical delivery of aluminum over the financial market price were large and are likely to keep their levels, implying robust demand. Mr. Kleinfeld also explained that the companys upbeat results over the period were largely attributed to the recovery in the commodity primary metals divisions performance.

As reported by the Wall Street Journal, Mr. Kleinfeld shared that the fourth fiscal quarter “capped a pivotal year as we significantly accelerated Alcoa’s transformation”.

According to its statement, Alcoas profit excluding one-time items amounted to $0.33 per share, surpassing analysts forecasts for $0.27 per share. Net income was $159 million, or $0.11 per share, compared to a loss of $2.34 billion, or $2.19 per share, a year earlier.

Sales jumped by 14% from $5.58 billion a year earlier and reached $6.38 billion, while analysts had projected $6.05 billion. For the full year, the company achieved a net profit of $268 million, compared to a $2.3-billion loss in 2013, dubbing it the best operating result since 2008.

Alcoa managed to ship a record volume of automotive aluminum sheet over the fourth fiscal quarter, while also benefiting from higher aluminum and aluminum oxide prices, and projected a 7% increase in the global use of the lightweight metal in 2015.

The company also forecast it will increase its aerospace sales by as much as 10% over the year on larger commercial and regional jets demand, according to CEO Kleinfeld. Mr. Kleinfeld is also working on downsizing the non-profitable aluminum smelters operations, while betting on further expansion in manufacturing.

Alcoa Inc. rose 0.37% on Monday in New York to close at $16.17 per share, marking a one-year change of +59.94%. The company is valued at $19.06 billion. Shares stood 2.25% higher at €14.06 in Frankfurt at 9:03 GMT. According to CNN Money, the 19 analysts offering 12-month price forecasts for Alcoa Inc. have a median target of $20.00, with a high estimate of $25.50 and a low estimate of $13.00. The median estimate represents a +23.69% increase from the last price of $16.17.