Subject: Alcoa Drops After Revenue Trails Estimates as Dollar Weakens (1)
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Thad Brown" <[email-masked]>, "Chris Heinz" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Ronnie Mainieri" <[email-masked]>, "Curt Hastings" <[email-masked]>, "Devon Archer" <[email-masked]>
Date: Tue, 12 Apr 2011 09:15:27 -0400

Curt mentioned this morning radio speculation that the failure to meet  
revenue estimates could set Alcoa up for a takeover. The problem as I  
see it is that the firms in the metal processing sector large enough  
to take over Alcoa are Chinese, Russian or Indian/European. M

Alcoa Drops After Revenue Trails Estimates as Dollar Weakens (1)
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By Colin McClelland

April 12 (Bloomberg) -- Alcoa Inc., the largest U.S. aluminum  
producer, fell in New York trading after reporting first-quarter sales  
that missed analysts’ estimates as the dollar weakened.

Alcoa declined 56 cents, or 3.2 percent, to $17.21 yesterday after the  
close of regular New York Stock Exchange trading. The company’s sales  
increased 22 percent from a year earlier to $5.96 billion, Alcoa said  
yesterday in a statement. That trailed the $6.06 billion average  
estimate of eight analysts in a Bloomberg survey.

Alcoa, traditionally the first company in the Dow Jones Industrial  
Average to report quarterly results, said its earnings were curbed by  
a weaker U.S. dollar, and higher energy and raw-material costs.

“The issue gets down to currency,” Chuck Bradford, president of  
Bradford Research, said in a telephone interview from New York. “They  
took a significant hit in the strong loonie, the Aussie dollar and the  
real.”

Alcoa operates in 31 countries, selling aluminum in U.S. dollars and  
paying costs in local currencies. The Canadian dollar has advanced 4.8  
percent against its U.S. counterpart in the past 12 months while the  
Brazilian real gained 11 percent. In Australia, where the company  
generated 14 percent of its revenue last year, second to the U.S., the  
currency appreciated about 12 percent.

German Trading

Alcoa traded at $17.23 in Frankfurt as of 10:05 a.m. local time today,  
3 percent below the close in New York.

First-quarter net income of $308 million, or 27 cents a share,  
compared with a loss of $201 million, or 20 cents, a year earlier, the  
New York-based company said in the statement. Profit excluding  
restructuring costs and other one-time items was 28 cents a share,  
topping the 27-cent average estimate of 14 analysts surveyed by  
Bloomberg.

Some costs for materials, such as caustic soda used in the processing  
of bauxite, are increasing following the earthquake and tsunami in  
Japan, Chief Financial Officer Chuck McLane said on a conference call  
to discuss the earnings.

“We are seeing increasing tightness in the Asian caustic market,”  
McLane said. “Due to this disruption as well as the continuing unrest  
in the Middle East, we expect to see higher input costs for fuel oil.”

Crude-oil prices on the New York Mercantile Exchange averaged 20  
percent more in the first quarter than a year earlier.

‘Cost Control’

“They beat on the bottom line with a lower top-line number, which  
suggests their cost control was better than expected,” John  
Stephenson, a portfolio manager at First Asset Investment Management  
Inc. in Toronto, said yesterday in an e- mailed response to questions.  
“Primary metal and sheet product prices have risen since March, so  
second-quarter earnings should be even better.”

Aluminum prices have advanced 11 percent in the past year in London  
because of improving demand for the metal, which is used in  
construction, autos and beverage cans. Alcoa said its average realized  
price for aluminum rose 15 percent from a year earlier to $2,682 a  
metric ton.

The company reiterated its forecast that global aluminum demand will  
grow 12 percent this year.

“Our outlook for the rest of 2011 and beyond remains very positive,”  
Chief Executive Officer Klaus Kleinfeld said in the statement.