International aluminium titan Alcoa Inc. (ASX:AAI) lifted its profits back into the black during the first quarter of 2015. The company posted a profit of $US195m, or 14c per share in an announcement to the ASX on Thursday. First quarter profits came in significantly higher than the previous quarter’s profit loss of $US178m, or 16 cents per share. Revenue increased by 6.7 per cent but was slightly below projections, coming in at $US5.82bn, as opposed to the expected $US5.94bn. The report to the ASX also underlined a record Engineered Products and Solutions first quarter after-tax operating income of $US191m. Alcoa was also lifted by quarterly smelting division profits, which reported earnings of $US187m, compared with a $US15m loss a year ago. The company cited “favourable foreign currency exchange rates, lower energy costs in Spain and productivity improvements” as the reason for the improved smelting profits.
Chief Executive Klaus Kleinfeld underscored improvements to divisions across the company. Mr. Kleinfeld said that “swift action” allowed the company’s raw aluminium division to become “more competitive”. He also cited cost cutting in the company’s smelting business as a source of improved efficiencies. Over the past 8 years Alcoa has closed or sold 31 per cent of its “highest-cost global smelting capacity.” The company said they expect profits to be higher but that it was inhibited due to an unfavourable “price/mix” and “unfavourable currency exchange rates”. However, the company said it expected aluminium demand to grow and lift profits in the future. “Given final 2014 worldwide aluminum demand, Alcoa has upwardly revised its view of global aluminum demand growth in 2015 to 9 percent, an increase from the prior forecast of 7 percent. This results in global consumption of 54 million metric tons, or 1.2 million metric tons higher than previously forecast.”
Shares of AAI have had a strong year. AAI has advanced 75.48 per cent in the last 12 months and have risen 17.28 per cent so far this year.