) announced that it has begun construction of its $90-million,
115,000 square-foot greenfield aluminum lithium expansion project
of Lafayatte, Indiana facility that will produce state-of-the-art
aluminum lithium alloy. The new facility is expected to start
production by the end of fiscal 2014. The company's investment in
the facility is supported by the Indiana Economic Development
The newly introduced alloy will help airplane manufacturers
produce relatively light weight wings and fuselage without
resorting to composite materials. Moreover, the expansion of the
facility is expected to create around 75 permanent jobs and about
150 temporary jobs during the period of construction.
The primary target of the company is to help the original
equipment manufacturers reduce fuel consumption per seat mile. The
expansion will help the company produce more than 20,000 tonnes of
aluminum lithium, and cast round and rectangular ingot for rolled,
extruded and forged applications.
Alcoa released its first-quarter 2012 results in April. The
company reported earnings of 9 cents per share in the quarter in
contrast to a loss of 18 cents in the fourth quarter of 2011.
However, it came below the earnings of 27 cents a share recorded a
Excluding restructuring charges and other items, Alcoa's profit
came in at 10 cents per share, beating the Zacks Consensus Estimate
of a loss of 4 cents per share. The impressive results coupled with
the company's bullish outlook pushed up its stock price by 5.4% to
$9.82 in after-hours trading. Higher production and volumes as
well as improved market conditions drove Alcoa's results.
Quarterly revenues increased by 0.3% sequentially to $6,006
million and edged up 0.8% over the prior-year quarter. It surpassed
the Zacks Consensus Estimate of $5,735 million. The increase in
revenues was driven by strong results in Global Rolled Products and
Engineered Products and Solutions.
For 2012, Alcoa expects global aerospace market to grow by 3
percentage points to 13% to 14%. The company also expects global
growth for the automotive sector to be in the range of 3%-7%,
commercial transportation in the range of 1%-5%, packaging in the
range of 2%-3%, building and construction in the range of
2.5%-3.5%, and industrial gas turbine in the band of 1%-2%.
The company believes that there will be a deficit in global
aluminum supply in 2012. Besides, Alcoa reiterated its expectation
that aluminum demand will grow by 7% globally in the year.
Pennsylvania-based Alcoa Inc. is among the world's leading
producers of primary and fabricated aluminum and alumina. It
Aluminum Corporation Of China Limited
We believe that the Alcoa's cost reduction measures are
offsetting the negative impact of higher energy and raw material
costs on its profitability to some extent. The company aims to
reduce costs in its upstream business and achieve record profits in
its mid stream and downstream businesses. It is also divesting
underperforming assets through its restructuring program.
Currently, the stock maintains a Zacks #3 Rank, which translates
into a short-term (1 to 3 months) "Hold" rating and we have a
long-term recommendation of "Neutral" on the shares of the
ALCOA INC (AA): Free Stock Analysis Report
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