Alcoa posts $2.3 billion 4Q loss on write-downs

AP News
Posted: Jan 09, 2014 6:40 PM
Alcoa posts $2.3 billion 4Q loss on write-downs

DALLAS (AP) — Alcoa Inc. reported a $2.34 billion fourth-quarter loss on Thursday as low aluminum prices caused it to write down the value of acquisitions made more than a decade ago.

Without the huge charges, the company posted an adjusted profit that still fell short of Wall Street expectations. Its 5 percent revenue decline was less severe than analysts had forecast.

Shares slipped 4 percent to $10.26 in aftermarket trading. They fell 14 cents to end the regular session at $10.69.

Alcoa is struggling with a worldwide glut of aluminum that is creating stubbornly weak prices — in the quarter, the company received an average price that was 7 percent lower than it got a year earlier. The company has idled one-sixth of its smelting capacity and could make more cuts.

It sees a brighter future in segments that sell rolled aluminum and engineered products, which accounted for 57 percent of company revenue in 2013. Alcoa expects that demand will continue to rise for aluminum products in airplanes, autos and commercial construction, much of it driven by growth in China.

Alcoa predicted that overall aluminum demand would grow 7 percent this year, the same as in 2013.

Separately, a joint venture of which Alcoa owns 60 percent admitted bribing officials in the Middle East kingdom of Bahrain through a London-based middleman. The affiliate, Alcoa World Alumina LLC, will pay $223 million in fines and criminal penalties for violating a federal law against bribing foreign officials, and the parent company agreed to pay a civil penalty of $161 million for related violations of Securities and Exchange Commission rules.

In 2012, Alcoa settled related claims by state-controlled Aluminum Bahrain for $85 million.

CFO William Oplinger told reporters that penalties will be "manageable" because they will be spread over five payments. With the plea deal and write-downs related to acquiring Alumax in 1998 and Reynolds Metals in 2000 due to current low aluminum prices, "We've put a number of legacy matters behind us," he said.

The fourth-quarter loss equaled $2.19 per share. A year earlier, the company earned $242 million, or 21 cents per share. The company said that without the write-downs, restructuring and tax items, it would have earned 4 cents per share. Analysts were expecting adjusted profit of 6 cents per share.

Revenue fell 5 percent to $5.59 billion, but that beat the forecast of $5.36 billion from analysts surveyed by FactSet.