Alcoa posts 4Q profit and sales jump as earnings season begins

By Sandy Shore, Associated Press

DENVER — Alcoa said Monday its fourth-quarter earnings jumped on higher sales to a range of businesses, from aerospace to commercial construction.

It marked the third consecutive quarterly profit for the aluminum manufacturing giant, which appears to have turned the corner after recording losses in 2008 and 2009 because of the recession. The company also expects business to continue to improve, forecasting a 12% increase in global aluminum demand this year.

Alcoa (AA) reported net income of $258 million, or 24 cents a share, for the October-December quarter, compared with a net loss of $277 million, or 28 cents a share in the same period of 2009.

The most recent results include a $35 million one-time gain for special items, including restructuring issues and income tax benefits.

Revenue rose 4% to $5.65 billion from $5.43 billion a year ago.

The results topped analysts' forecasts for earnings of 18 cents a share, according to FactSet.

Alcoa said sales improved in key markets; including aerospace, commercial construction, industrial gas turbines and distribution. It also benefited from higher aluminum prices, but that was tempered by increased energy costs and unfavorable currency exchange rates.

For the year, Alcoa reported net income of $254 million, or 25 cents a share, compared to a net loss of $1.15 billion, or $1.23 a share in 2009.

Revenue rose to $21 billion from $18.4 billion.

Alcoa's performance can reflect broader economic trends, because its products reach a broad range of businesses. Its customer base includes automobile, trucking and aircraft companies, consumer products and construction. Nearly 80% of its sales are in the U.S. and Europe.

Argus Research analyst Bill Selesky said the company should continue to show improvement as long as the economy gets stronger. "They're making a big turnaround here," he said.

Alcoa struggled as demand dried up in the recession and metal prices plummeted. The company cut jobs and capacity at its plants.

Now Alcoa plans to restart some operations at three U.S. smelters this year, creating 260 jobs to be filled either by recalling laid-off workers or new hiring.

During the fourth quarter, global aluminum inventories shrank while the average aluminum price rose about 13% from the third quarter, analysts said.

Alcoa released its earnings after the market closed. Its shares fell 32 cents, almost 2%, to $16.17 in after-hours trading.

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