) intends to divest certain assets at its Rockdale, Texas site to
Lower Colorado River Authority. The sale will include approximately
34,000 acres of property, all surface and groundwater rights,
certain common plant and equipment assets, and Alcoa's power
contracts with Luminant. However, Alcoa did not disclose the terms
of the deal.
The deal is expected to close by early next year subject to
requisite approvals and fulfillment of necessary conditions. Alcoa
also announced that it will retain the ownership of its smelter and
aluminum powder operations at the site.
Alcoa had temporarily stalled smelting operations in Rockdale back
in 2008 and permanently shut down two of its six lines in January
this year to reduce costs due to weak aluminum prices.
Alcoa is a leading producer of primary and fabricated aluminum
as well as the world's largest miner of bauxite and refiner of
alumina. The company reported a loss of $2 million (break-even on a
per-share basis) in the second quarter of 2012 compared with a
profit of $322 million (or 28 cents a share) in the year-ago
quarter. The year-over-year decline was due to lower aluminum
Excluding one-time special items (including restructuring and
other charges, litigation expenses and tax-related items), Alcoa
earned 6 cents a share in the quarter, in line with the Zacks
Consensus Estimate but lower than the year-ago earnings of 32 cents
Revenues decreased 9.4% year over year to $5,963 million, but
were ahead of the Zacks Consensus Estimate of $5,828 million. While
weak aluminum prices dragged down revenues, the company witnessed
increased demand across aerospace and automotive markets in the
quarter. Aluminum prices dropped 18% year over year and 4%
sequentially in the quarter.
Alcoa witnessed strong performances across all its businesses
during the quarter, driven by higher utilization rates, process
innovations, lower scrap rates and usage reductions. The company
expects higher demand for aluminum from automobile, aerospace,
packaging and commercial transportation end markets in the near
Alcoa competes with
Aluminum Corporation of China Limited
). The stock maintains a Zacks #4 Rank, which translates into a
short-term (1 to 3 months) Sell rating.
ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis Report
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