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Alcoa's quarterly profit falls 52%

October 08, 2008|From the Associated Press

PITTSBURGH — Alcoa Inc., one of the world's largest aluminum producers, reported a 52% drop in third-quarter profit Tuesday and said it would conserve cash by suspending its stock buyback program and all noncrucial capital projects.

Alcoa, the first component of the Dow Jones industrial average to report earnings for the period, said results were hurt by sharply lower aluminum prices, weaker demand and a charge from curtailing production at a Texas smelter.

The company reported earnings of $268 million, or 33 cents a share, for the three months ended Sept. 30. That contrasts with $555 million, or 63 cents, a year earlier. The latest quarter included a charge of 4 cents a share for the smelter curtailment in Rockdale, Texas, which involved about 660 layoffs.

Revenue edged down 2% to $7.23 billion.

Shares of Alcoa declined $1.40, or 7.7%, to $16.71 in regular trading and dropped an additional 68 cents in after-hours trading following the release of earnings.

Analysts polled by Thomson Financial, on average, expected profit of 50 cents a share on revenue of $7.23 billion. Those estimates typically exclude one-time items.

Klaus Kleinfeld, Alcoa's president and chief executive, said profit was squeezed as aluminum prices and demand declined and costs rose.

Those conditions "will have a greater impact going forward but will be somewhat mitigated by the easing of energy prices and a stronger U.S. dollar," he said in a statement.

He said Alcoa's suspension of its share buyback program and noncrucial capital projects were actions taken "to conserve cash and maximize profitability through very adverse economic conditions."

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