Alcoa today reported a big jump in first quarter profits despite lower sales, saying it benefited from lower costs and strong aerospace industry demand.
The aluminum producer reported net income of $149 million, or 13 cents per share, which exceeded earnings of $94 million, or 9 cents per share, in the first quarter of 2012. Sales slid 3 percent to $5.83 billion because of lower aluminum prices and reduced production from Alcoa's European mills.
Excluding one-time items, earnings totaled 11 cents per share, topping analyst estimates of 8 cents per share.
Chairman and CEO Klaus Kleinfeld said demand for finished aluminum products made by the company's downstream businesses contributed to the strong performance.
He reaffirmed the company's forecast that global aluminum demand will grow 7 percent this year. Aerospace demand will grow 9 to 10 percent while automotive demand will rise 1 to 4 percent, Mr. Kleinfeld said.
Alcoa said it is continuing negotiations with the U.S. Justice Department and the Securities and Exchange Commission over bribery allegations involving its dealings with Aluminium Bahrain. The Bahrain company alleged it was overcharged $400 million for raw materials because Alcoa steered bribes through a middleman who is facing criminal charges in Britain.
Alcoa, while admitting no wrongdoing, last year settled a civil lawsuit brought by Aluminium Bahrain. The company said it cannot estimate the costs of resolving the Justice and SEC investigations and will take the matter to trial if a settlement cannot be negotiated.
The results were disclosed after the market closed. Alcoa shares finished today at $8.39, up 15 cents. They are off 3 percent this year.
Len Boselovic: firstname.lastname@example.org or 412-263-1941.