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Alcoa earnings as expected, revenue tops forecasts

| Tuesday, Jan. 8, 2013, 4:34 p.m.

Alcoa Inc. said Tuesday that fourth-quarter profit met Wall Street's expectations, and it sees slightly higher demand for aluminum this year.

Net income was $242 million, or 21 cents per share, including one-time gains such as income from selling a hydroelectric project in Tennessee and North Carolina.

Without those gains, the company would have made 6 cents per share — exactly what analysts expected, according to FactSet — on revenue of $5.9 billion. Sales were higher than the $5.58 billion that analysts predicted.

A year ago, New York-based Alcoa posted a fourth-quarter loss of $191 million, or 18 cents per share, on revenue of $5.99 billion.

Alcoa, with a North Shore corporate center and technical center in New Kensington, is the first company in the Dow Jones industrial average to report fourth-quarter earnings. Because it makes aluminum for so many key industries, investors study Alcoa's results for clues about the health and direction of the economy.

Alcoa shares closed unchanged at $9.10. In after-hours trading following the earnings report, the stock gained 14 cents to $9.24.

The weak global economy has hurt demand for aluminum used in everything from airplanes to soda cans.

But Alcoa sees demand growing 7 percent in 2013, up from a 6 percent gain in 2012. The best prospects are in aerospace, with 9 to 10 percent growth expected, the company said, while less improvement is expected in autos, packaging, and building and construction materials.

Still, with a pickup in homebuilding and other factors, a 1 to 2 percent rise in demand for aluminum used in construction is forecast in North America.

“This is, in my view, the most positive surprise,” CEO Klaus Kleinfeld said during a conference call with financial analysts. Globally, construction sales growth of 4 to 5 percent is projected. The company said it hit record profits in its aluminum-rolling and product-making businesses while cutting costs in its mining and refining or “upstream” segment.

Kleinfeld said the company overcame volatile aluminum prices and global economic weakness and was in “strong position to maximize profitable growth” in 2013.

“The metal price helped out,” said Kuni Chen, an analyst at CRT Capital Group in Stamford, Connecticut, who recommends buying the shares. “They're meeting their revenue growth goals in the downstream.”

Separately, the company announced that chief financial officer Charles D. McLane Jr., 59, will retire and be replaced by William F. Oplinger, the chief operating officer of Alcoa's primary-products business unit. The change will happen April 1.

Alcoa also noted in its earnings release that it hasn't reached a settlement with the Department of Justice and Securities and Exchange Commission, regarding their investigations of bribery allegations made by a Bahrainian aluminum maker.

Alcoa in October said it agreed to an $85 million settlement of a lawsuit filed by Aluminium Bahrain BSC, known as Alba, and litigated in U.S. District Court in Pittsburgh.

If the company can't reach an agreement through negotiations with the federal entities, “Alcoa will proceed to trial with the DOJ and the SEC and under those circumstances is unable to predict an outcome or to estimate its reasonable possible loss,” the company said.

The Associated Press and Trib Total Media staff writer Kim Leonard contributed to this report. She can be reached at 412-380-5606 or kleonard@tribweb.com.

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