Alcoa said it lost $1.2 billion, or $1.49 a share. In the year-earlier period, the aluminum giant earned $632 million, or 75 cents a share. Sales fell to $5.7 billion, from $7 billion.
Aluminum prices dropped 35% from a year ago, Alcoa (AA:![]()
AA 10.06, -0.75, -6.9%) said. Weak demand and excess supply has caused aluminum prices to fall 56% from July highs.
alcoa inc com
Last: 10.06-0.75-6.94%
4:00pm 01/12/2009
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4:00pm 01/12/2009
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For 2009, Alcoa projects global aluminum consumption will slide 2% to 36 million metric tons as China's dramatic consumption rate slows on top of cuts in North America and Europe. Consumption slipped 3% last year, chief executive officer Klaus Kleinfeld said.
He added that inventories at Alcoa customers and distributors were "very low."
Last week, Alcoa laid out a restructuring plan to conserve cash as it waits for aluminum demand to rebound. It plans to cut more than 15,000 jobs, close plants, curb aluminum output and slash capital expenditures by 50%. It also intends to sell four consumer-related business units that lost a combined $105 million in 2008 after taxes.
Alcoa shares have lost 68% in value over the past year, making it one of the worst performers among the 30 components that make up the Dow Jones Industrial Average.
With aluminum prices weak and inventories growing, there are concerns Alcoa may have to scale back its annual 68-cent dividend or cut production more.
"It's a real question if they maintain the dividend," said Brian Hicks, portfolio manager at U.S. Global Investors' Global Resources Fund (PSPFX:![]()
PSPFX 5.21, -0.27, -4.9%) , which does not own Alcoa shares. "Management is desperately trying to keep the dividend."
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6:06pm 01/12/2009
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6:06pm 01/12/2009
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Investors have been betting big against Alcoa. The short interest in Alcoa shares is at its highest level since 1998 and five times its average level over that 10-year time period. Short sellers are investors who bet a stock will drop over time, rather than gain in value.
Deutsche Bank took a more bearish stance ahead of Monday afternoon's earnings report. The broker cut Alcoa shares to sell, from hold, and shaved its price target to $8 from $10.
In trading Monday, Alcoa shares closed at $10.06, a decline of 7%.
