Analysts say investors think Alcoa, Inc., is on the comeback trail. Shares have risen about 51 percent in the last six months.
Fourth-quarter earnings, reported on Jan. 10, jumped on higher sales to a range of businesses, from aerospace to commercial construction.
It was 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 expects business to continue to improve, forecasting a 12 percent increase in global aluminum demand this year.
Alcoa, which has operations in Blount County, said sales will improve in most of its markets, as the global aluminum supply shrinks. That should support higher prices. It also expects higher costs for energy and currency exchange rates.
Alcoa sees its strongest gains coming in the automotive sector, where sales are forecast to grow as much as 11 percent over 2010. Last week U.S. carmakers reported sales picked up in the final months of 2010 and they expect them to keep rising this year.
“We are now accelerating as the market picks up,” Chairman and CEO Klaus Kleinfeld said of Alcoa’s customers on a conference call. “And we have pretty ambitious targets in pretty much (all) of our major segments.”
Kleinfeld also sees opportunities for products in which aluminum can be substituted for higher-priced copper, such as building facades, battery cables and consumer electronics like smartphones and laptop computers.
Alcoa 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 percent to $5.65 billion from $5.43 billion a year ago.
The results topped analysts’ forecasts for earnings of 18 cents per share, according to FactSet.
Alcoa said fourth-quarter sales improved in key markets; including aerospace, commercial construction, industrial gas turbines and distribution. It also benefited from higher aluminum prices, which rose about 13 percent from the third quarter.
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 reflects broader economic trends, because its products reach a range of businesses. Its customer base includes automobile, trucking and aircraft companies, consumer products and construction. Nearly 80 percent 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. The company says it has no plans to increase capacity beyond that.