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Alcoa posts profit on cost cuts

October 08, 2009|Associated Press

PITTSBURGH — Painful cost cutting and rising sales to automakers helped the nation's largest aluminum producer return to profitability for the first time in nine months.

Alcoa Inc. on Wednesday also forecast an 11% increase in worldwide aluminum demand for the rest of the year. The lightweight metal is used in the building of such things as airplanes, cars and houses.

Even though Alcoa reported a 71% drop in third-quarter profit from a year earlier, the results were a relief after three straight quarterly losses.

"We do clearly see growth, substantial growth . . . in China," Alcoa Chief Executive Klaus Kleinfeld said.

The Pittsburgh company said rising demand from several industries, especially automakers, lifted its revenue compared with the prior three months.

Investors cheered the news, sending Alcoa's shares up 5.2%, or 74 cents, in after-hours trading to $14.94.

Alcoa earned $77 million, or 8 cents a share, for the three months that ended Sept. 30. That compared with profit of $268 million, or 33 cents, a year earlier. Revenue tumbled 34% to $4.62 billion from the same period last year, but was up 9% from the second quarter of 2009.

The latest results partly reflected intense cost cutting as aerospace, automotive and construction companies cut their orders late last year.

Excluding restructuring charges, Alcoa's earnings in the latest quarter amounted to 4 cents a share, easily beating expectations of a loss of 9 cents on revenue of $4.55 billion. Wall Street typically excludes one-time charges in its estimates.

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