Alcoa’s Profit Climbs 14% Despite an Increase in Costs

Alcoa Inc., the world’s biggest aluminum maker, said Thursday that second-quarter profit rose 14% after an asset sale, tax benefits and a surge in alumina demand outweighed higher costs for raw materials and job cuts.

Net income rose to $460 million, or 52 cents a share, from $404 million, or 46 cents, a year earlier, Pittsburgh-based Alcoa said. Excluding some items, profit was 46 cents. On that basis, analysts expected 45 cents, the average estimate of 16 analysts surveyed by Thomson First Call.

Earnings were better than expected because of a “blowout” performance in alumina, a raw material used in making aluminum, said Charles Bradford of Bradford Research in New York.

“It was especially strong in some of the divisions where there were question marks,” such as rolling mills and packaging units, he said.

Profit from alumina, which Alcoa also sells to rival producers, rose 14%. The company earned $219 million selling shares of aluminum maker Elkem of Norway and received $120 million in tax settlements.

Chief Executive Alain Belda this year announced plans to shed 8,100 workers and close plants to help offset raw-material costs that jumped $60 million in the quarter. The annual savings will be about $195 million.

Shares of Alcoa rose 9 cents to $26.09. Before Thursday’s session, the stock had fallen 19% in the last year as aluminum prices declined and Alcoa’s costs rose.

Profit in the company’s raw aluminum business fell 19% to $187 million.

Cost increases for raw materials such as energy and resins jumped $60 million in the quarter, eroding the benefit of reductions in other parts of the business, Alcoa said. The company cut its estimate of capital expenditures for the year to $2.2 billion from an April 6 forecast of $2.5 billion.