NEW YORK (AP) — Alcoa Inc.'s second-quarter profit slipped nearly 4 percent, but earnings and revenue beat Wall Street expectations and the shares rose in after-hours trading on Monday.
Alcoa has been on a long quest to shrink its aluminum-smelting business, which has been hurt by stubbornly low prices. The price Alcoa got for a ton of aluminum fell 15 percent from a year ago although it increased from the first quarter.
Later this year Alcoa plans to split that segment off and create a new public company to make and sell specialty lightweight products for aerospace, autos and other industries.
The company said Thursday that the split is still on track later this year.
Alcoa's results are watched closely as a barometer of the economy because its products are used in so many industries. It is also marks the unofficial kickoff of earnings season, as the first major U.S. company to report results.
Alcoa said it earned $135 million, down from $140 million a year earlier. Excluding restructuring and other charges, income was 15 cents per share, compared with an average forecast of 9 cents per share, according to six analysts surveyed by Zacks Investment Research and 14 polled by FactSet.
After-tax operating income from its metals business fell 47 percent, which CEO Klaus Kleinfeld said in an interview reflected lower metals prices and the closure, sale or idling of about 40 percent of Alcoa's smelting capacity in the last several years. He said that when prices rise Alcoa will see immediate improvement in profit because it has cut costs sharply.
The part of the company that makes products for cars, planes, construction and other industries posted a 3 percent gain in operating income. That side will become the new company, Arconic. Growth slowed in the aerospace market in the first half of 2016, but Alcoa is predicting a rebound partly on demand for alloys used in jet engines.
Total revenue was about $5.3 billion, down 10 percent from $5.9 billion a year earlier. Eleven analysts surveyed by FactSet estimated $5.23 billion.
The shares rose 40 cents, or 3.9 percent, to $10.54 in about an hour of extended trading after the report. They closed the regular session at $10.14, up 32 cents, or 3.3 percent, for the day and 2 percent since the beginning of the year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AA at http://www.zacks.com/ap/AA
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