DALLAS (AP) — Alcoa swung to a third-quarter profit driven by demand from auto makers and cost-cutting in the face of lower aluminum prices.
The results beat expectations, and the company's stock climbed in after-hours trading.
With the world awash in aluminum, Alcoa has been idling plants to cut smelting capacity by 16 percent. That helped it cut its production costs by 9 percent, more than enough to offset a 7 percent drop in the cash price of the metal on the London market.
Alcoa Inc. said Tuesday that it earned $24 million, or 2 cents per share, in the July-September quarter, compared with a year-ago loss of $143 million, or 13 cents per share.
The company said that excluding $96 million in restructuring and other one-time costs and gains, it would have earned 11 cents per share. Analysts forecast profit of 5 cents per share, according to FactSet.
Alcoa credited higher productivity and strong results in its engineered-products and rolled-aluminum units, which now account for more than half its revenue. The company sells rolled aluminum sheets to car makers, a business that it expects will grow rapidly as manufacturers boost fuel mileage by producing lighter vehicles. Alcoa is expanding a rolling mill in Tennessee that serves the auto market.
The company said that the commodity end of its business — mining and smelting — performed better in a tough market.
Overall revenue fell 1 percent to $5.77 billion, but still beat the $5.64 billion prediction of analysts.
Alcoa has been reducing costs in mining and other functions, and Chairman and CEO Klaus Kleinfeld said the third-quarter results showed that the "repositioning" is "on the right path."