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Alcoa's Profit Misses Forecasts

October 11, 2006|From Reuters

NEW YORK — Alcoa Inc. said Tuesday that its third-quarter profit almost doubled, but results were below Wall Street forecasts because of lower aluminum prices, higher costs and weakness in the automotive and home-building sectors.

The world's largest aluminum producer warned in July that a surge in aluminum prices would abate in the third quarter. And the cost of producing the metal rose from the second quarter.

"I think that cost pressures are going to continue to build throughout the economy and Alcoa is going to feel it," said Peter Schiff, president of Euro Pacific Capital.

The results surprised Wall Street, and the company's shares, which rose 30 cents to $28.29 in regular trading, fell 6% to $26.60 in after-hours trading.

Brian Hicks of the U.S. Global Resources Fund said it remained to be seen whether the weakness was mainly because of a "seasonal slowdown," and he warned of potentially wider implications as the third-quarter earnings reporting season begins this week.

Net income was $537 million, or 61 cents a share, compared with $289 million, or 33 cents, a year earlier, Alcoa said. Revenue rose 19% to $7.63 billion.

Aluminum prices, although higher than last year, were 6% lower than the previous quarter.

Analysts on average had expected earnings of 77 cents a share and revenue of $7.68 billion, according to Reuters Estimates.

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