) announced that it has agreed to form a joint venture with
Russia's VSMPO-AVISMA Corporation, a leading maker of titanium
ingots and forged products. Both Alcoa and VSMPO-AVISMA signed a
cooperation agreement in Moscow to develop high end titanium and
aluminum products for the aerospace industry.
The joint venture is expected to be operational in 2016 and once
formed, will combine Alcoa's expertise in manufacturing
value-added products which utilize VSMPO-AVISMA's expertise in
the production of titanium. Finished product manufactures
will include high-end aerospace goods such as landing gear and
forged wing components at Alcoa's Samara plant.
Through the agreement, Alcoa will be able to increase its
competitiveness and position its global aerospace business for
continued profitable growth. VSMPO-AVISMA, on the other hand,
will get access to unique forging equipment, enabling it to
increase output and maintain consistent supply. The company can
thereby increase its productivity and presence in the market.
Alcoa estimates that the aerospace market would grow 9%-10% in
2013 and with this joint venture in place both can work on their
respective strengths in making the largest and most advanced
aerospace forgings in the world.
A few days ago, Alcoa released its third quarter results. The
company posted a profit of $24 million or 2 cents per share in
the quarter compared with a loss of $143 million or 13 cents per
share in the year-ago quarter. The results include restructuring
and other one-time charges/gains of $96 million.
Excluding one-time special items, earnings were $120 million
or 11 cents a share in the quarter, much ahead of the year-ago
earnings of $76 million or 7 cents per share and Zacks Consensus
Estimate of 6 cents. Productivity gains, strong demand from auto
makers, healthy operating performance and cost cutting supported
the results despite lower metal prices.
Revenues dropped roughly 1.2% to $5,765 million from $5,833
million in the year-ago quarter but exceeded the Zacks Consensus
Estimate of $5,713 million. The decline was due to weak aluminum
prices, offset by strong demand in the aerospace and automotive
Alcoa reiterated its global aluminum demand growth expectation of
7% for 2013.
Alcoa, a prominent player in the mining industry along with
Aluminum Corporation of China Ltd.
Atlatsa Resources Corp.
BHP Billiton Ltd
), is a world leader in production and management of primary
aluminum, fabricated aluminum, and alumina. The company is also
the world's largest miner of bauxite and refiner of alumina.
Alcoa currently retains a short-term Zacks Rank #3 (Hold).
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