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Alcoa Earnings Soar on Strong Demand

July 11, 2006|From the Associated Press

PITTSBURGH — Aluminum producer Alcoa Inc. on Monday said second-quarter profit ballooned 62% as higher aluminum prices and strong demand from the aerospace and construction industries boosted results.

Net income surged to $744 million, or 85 cents a share, from $460 million, or 52 cents, a year earlier. The recent results include charges of $35 million, or 4 cents a share, related to the ratification of a U.S. labor contract and the costs of preparing for a potential work stoppage during the quarter.

Revenue rose 19% to $7.96 billion because of higher aluminum prices and strong demand from aerospace, building and construction, commercial vehicle and can sheet markets.

Analysts polled by Thomson Financial forecast earnings of 86 cents a share on slightly higher sales of $8.01 billion.

Alcoa shares slumped 4.5% to $31.91 in late trading after closing the regular session 14 cents lower at $33.41. Alcoa shares have gained about 13% so far this year.

"I thought the number was pretty good. There were some people who thought the revenue was a little light," said analyst Charles Bradford of Bradford Research-Soleil Securities Corp. in New York.

"The big issue is the third quarter is going to be a little weaker," Bradford said.

Alcoa recorded its highest quarterly profit in the company's more than 115-year history, Chairman and Chief Executive Alain Belda said.

"Alcoans have generated another record quarter -- delivering today while we continue building for the future," Belda said. "By creating solutions for our customers and continuously improving productivity, we have driven record top- and bottom- line performances."

But Belda cautioned not to expect third-quarter results to be as strong.

Alcoa traditionally is the first of the Dow Jones industrial average's 30 large-cap companies to report earnings each quarter.

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