Alcoa Upgrades Full-Year Outlook Slightly in Q3 Financial Report

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Alcoa, a leading producer of bauxite, alumina and aluminum products, announced a $200 million share buyback program on Wednesday as part of the release of its third-quarter financial results.
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“Today’s stock buyback announcement, our smaller net pension and OPEB liability, and our results since launching Alcoa Corporation nearly two years ago all point to the success of our strategic priorities,” President and Chief Executive Officer Roy Harvey said in a prepared statement. “By reducing complexity, driving returns, and strengthening the balance sheet, we’ve made Alcoa a much stronger company even as commodity markets remain volatile. We’re pleased to announce a program to return cash to stockholders, and we look forward to improving our Company further as 2018 comes to an end.”
In addition, the Pittsburgh-based firm announced slightly upgraded full-year guidance. In its Q2 report, the firm downgraded its full-year guidance for earnings before interest, taxes, depreciation and amortization (EBITDA) from a range of $3.5 billion to $3.7 billion down to a range of $3.0 billion to $3.2 billion, citing “current market prices,” among other factors.
This quarter, however, the firm has upgraded the full-year guidance at the lower end, bringing its range to $3.1 billion to $3.2 billion.
Alcoa reported Q3 EBITDA excluding special items of $795 million, down from the $904 billion in Q2 but up 37% from the $582 billion in Q3 2017.
Meanwhile, Q3 revenue hit $3.39 billion, up 14% from the $2.97 billion in revenues posted in Q3 2017.
In the supply markets, the firm continues to project global deficits for aluminum and alumina, but a surplus for bauxite.
“In aluminum, the Company expects a global deficit ranging between 1.0 million and 1.4 million metric tons, down from last quarter’s estimate of between 1.1 million and 1.5 million metric tons,” the release states. “Global aluminum demand growth is projected to be between 3.75 and 4.75 percent in 2018, down from the second quarter estimate of between 4.25 and 5.25 percent, driven by China.
“In alumina, Alcoa is projecting a higher global deficit of between 400 thousand and 1.2 million metric tons, compared to last quarter’s deficit expectation of between 200 thousand and 1.0 million metric tons.”
On the operations front, the firm announced the beginning of a formal consultation process with respect to dismissals of workers at two of the firm’s plants in Spain.
“Alcoa today announced its intention to begin a formal consultation process for collective dismissals that would affect all employees at its Avilés and La Coruña aluminum plants in Spain, which are the least productive within the Alcoa system due to their inherent structural issues,” the release stated. “Avilés employs 317 employees and La Coruña 369. Per Spanish law, Alcoa will initiate a mandatory 30-day consultation period with the workers’ representatives to achieve the best possible outcome for the Company and its workforce.”
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Alcoa closed at $36.70 per share on Wednesday, and continued to pick up steam in after-hours trading.

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