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Aluminum maker Alcoa to launch 3Q earnings season

October 10, 2011

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NEW YORK—The unofficial opening of earnings season starts Tuesday, when aluminum maker Alcoa Inc. reports third-quarter results after the markets close.

WHAT TO WATCH FOR: Alcoa sounded an upbeat tone three months ago, predicting a boost in aluminum sales for everything from airplanes to beverage cans. Tuesday's report could signal whether that optimism was well-founded or was derailed by a steady flow of bad economic news over the past several weeks.

The automobile industry is a big Alcoa customer, and last month the company announced plans to invest $300 million to expand a plant in Davenport, Iowa, to meet growing demand from auto makers. Alcoa said the expansion was based on business that is already guaranteed, but added that it sees more opportunity for sales to the auto industry in the long run.

Aluminum prices, however, have softened since spring. Combined with weaker demand from European manufacturers, the softer prices have helped push Alcoa shares to their lowest levels since early 2009. They fell 40 percent in the third quarter, closing at $9.57 on Sept. 30, the last day of the period.

WHY IT MATTERS: Alcoa makes aluminum for a range of industries including automobiles, construction and consumer products, so it's considered a bellwether for the economy. Alcoa's report could provide clues about how businesses are faring amid a weak economy and unsettling news that has made consumers reluctant to spend.

WHAT'S EXPECTED: Analysts surveyed by FactSet predict the company will earn 23 cents per share on revenue of $6.26 billion.

LAST YEAR'S QUARTER: Alcoa reported net income of $61 million, or 6 cents per share, in last year's third quarter, down 21 percent from a year earlier. Revenue totaled $5.3 billion.