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Alcoa Reported 3Q15 Earnings on October 8: Investor Takeaways (Continued from Prior Part) Alumina segment
Alcoa (AA) is the largest global bauxite and alumina producer, with a strong first quartile cost position in both businesses. Alcoa reports the earnings of its bauxite mining and alumina refining business under its Alumina segment. The segment supplies alumina to Alcoa’s Primary Metals segment as well as sells to third-party customers.
In this part of the series, we’ll look at the Alumina segment’s 3Q15 financial performance.
Together, Alcoa and Ball Corporation (BLL) form ~4.4% of the Materials Select Sector SPDR ETF (XLB).
Record earnings
- The Alumina segment’s third-party shipments in 3Q15 stood at 2,798 thousand tons, which represents a 3.1% year-over-year (or YoY) increase.
- Alcoa has been gradually moving away from aluminum-based pricing. Now it prices ~75% of its alumina based on the API (alumina price index) or spot pricing. This makes the Alumina segment’s fundamentals independent of aluminum prices.
- Third-party selling price in 3Q15 was up ~1% from the corresponding quarter last year, as you can see in the graph above.
- Alcoa’s alumina selling prices have risen on a YoY basis but have fallen compared to 2Q15. In 3Q15, lower API prices had a negative impact of $67 million on the Alumina segment’s earnings compared to 2Q15.
- In 3Q15, the Alumina segment generated ATOI (after-tax operating income) of $212 million, which was up more than 240% year-over-year. In the first nine months of the current year, the Alumina segment has generated the highest year-to-date profitability since 2007.
Outlook
- In 4Q15, Alcoa expects production to fall 120,000 metric tons due to curtailment of its Suriname refinery.
- It also expects the ATOI to increase by $10 million in 4Q15, excluding the impact of pricing and currency.
In the next part, we’ll analyze Alcoa’s Primary Metals segment’s 4Q15 financial performance.
Continue to Next Part Browse this series on Market Realist:
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Alumina Limited
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PRODUCER |
CODE : AWC.AX |
ISIN : US0222051080 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Alumina Ltd. is a exploration company based in Australia. Alumina Ltd. produces bauxite in Australia, in Brazil, in Jamaica and in Suriname, and holds various exploration projects in Brazil. Its main assets in production are HUNTLY / WILLOWDALE in Australia, MOCHO in Jamaica, MOENGO in Suriname and TROMBETAS RIVER in Brazil and its main exploration property is JURUTI in Brazil. Alumina Ltd. is listed in Australia, in Germany and in United States of America. Its market capitalisation is AU$ 4.2 billions as of today (US$ 2.7 billions, € 2.5 billions). Its stock quote reached its highest recent level on July 13, 2007 at AU$ 5.10, and its lowest recent point on March 13, 2009 at AU$ 0.54. Alumina Ltd. has 2 879 840 000 shares outstanding. |