Aluminium giant Alcoa has reported a massive $2.34 billion quarterly loss after recent declines in aluminium prices led to a $1.7 billion non-cash impairment charge on smelter acquisitions.
The company reported fourth-quarter profit that missed analysts’ estimates because of a glut of rolled metal used in the aerospace industry.
The net loss was $2.34 billion, or $2.19 a share, compared with net income of $242 million, or 21 cents, a year earlier, New York-based Alcoa said in a statement.
Profit in Alcoa’s global rolled products segment, which sells aluminium sheets and plates to aircraft builders and carmakers, fell 73 per cent from a year earlier to $21 million amid high inventories of aluminium plate used by original- equipment manufacturers, the company said.
"It was really the rolled-products business that was weaker than expected," Curtis Woodworth, a New York-based analyst at Nomura Holdings, said yesterday in a telephone interview.
The earnings statement was released after the close of regular trading in New York, where Alcoa fell 4.4 per cent to $10.22 at 8 p.m. yesterday. Fourth-quarter sales dropped 5.3 per cent to $5.59 billion.
The company had a $35 million loss in the primary-metals division, the metal-smelting segment, compared with a profit of $316 million a year earlier, while profit in its mining and engineered-products segments rose.
The price of the metal for delivery in three months on the London Metal Exchange fell 10 per cent from a year earlier to average $1,815 a metric ton in the fourth quarter, the lowest average price since the second quarter of 2009.
Global aluminium demand will increase by 7 per cent this year, Alcoa said in the statement.
That forecast matches the company’s estimate of demand growth in 2013.
Alcoa agreed to pay $384 million to resolve US criminal and civil probes into the Bahraini bribery case.
Its unit, Alcoa World Alumina, pleaded guilty yesterday in federal court in Pittsburgh to violating the FCPA.
“The settlement is slightly worse than anticipated,” Nomura’s Woodworth said. “I don’t think people were expecting that high of a payout.”
Alcoa has been dealing with allegations over its conduct in Bahrain since 2008, when Aluminium Bahrain BSC, known as Alba, sued it in US court for overcharges stemming from bribery.
Alcoa agreed last year to pay $85 million in cash and enter into a long-term alumina contract with Alba to settle the suit. That settlement had a total value of $447 million, Alba said in 2012.
Yesterday's settlement includes a criminal fine of $209 million, a forfeiture of $14 million and a disgorgement to the US Securities and Exchange Commission of $161 million, according to the Justice Department.
The total settlement is the fourth-largest in an FCPA case, according to the SEC.
“There is no allegation in the filings by the DOJ and there is no finding by the SEC that anyone at Alcoa knowingly engaged in the conduct at issue,” Alcoa said yesterday.
Bloomberg
