NEW YORK (Reuters) - Alcoa Inc. (AA.N) on Monday posted a 62 percent boost in profit on higher aluminum prices and aerospace demand, but second-quarter sales dipped below Wall Street estimates, sending its shares down 4 percent.þþ``We had a good first quarter and we were 22 percent better in the second, but we don't expect to repeat it in the third quarter,'' Chief Executive Officer Alain Belda told analysts on a conference call.þþChief Financial Officer Joe Muscari echoed the view that the recent surge would abate somewhat in the third quarter as aluminum prices slip from a mid-May peak and demand is affected by seasonal weakness, especially in the automotive industry.þþ``We do see continued underlying market strength, but we will see seasonality,'' he said, noting third-quarter business traditionally eases from holidays and plant maintenance.þþEarlier, in a television interview, Belda said despite any third-quarter slowdown, he still sees a strong year for Alcoa and does not expect an economic slowdown in the rest of 2006.þþLast week, analysts in Sydney said Alcoa, the world's largest aluminum producer, which has had disappointing financial results in recent years, was ripe for takeover. They cited Australian mining giants BHP Billiton (BHP.AX)and Rio Tinto Ltd. (RIO.AX) (RIO.L) as potential predators.þþAsked on cable TV network CNBC on Monday about a takeover, Belda said: ``We have not been approached.''þþPittsburgh-based Alcoa said net profit was $744 million, or 85 cents per share, compared with $460 million, or 52 cents per share in the same quarter last year. Earnings from continuing operations were 86 cents per share -- in line with an analysts' average compiled by Reuters Estimates. þþREVENUE SHORTFALLþþAlthough revenue rose nearly 19 percent to $7.96 billion, it was lower than analysts' expectations of $8.14 billion. As a result, in after-hours trading, Alcoa shares fell to $32.02 from its close of $33.41 on the New York Stock Exchange.þþSome analysts questioned the market's negative reaction.þþ``It's a tiny number (miss) and it depends a lot on foreign currency exchange,'' said Charles Bradford of Bradford Research/Soleil. He noted one analyst had estimated revenue of over $9 billion, which was too high in his opinion, and if discounted would bring the consensus down to $7.98 billion.þþAlcoa said the results were driven by higher London Metals Exchange prices and strong demand in aerospace, construction, as well as commercial vehicles and can sheet markets.þþAluminum started the quarter, in April, at $2,520 per tonne and rose to hit a peak on May 11 of $3,185. It closed on Monday at $2,570.þþ``We are seeing a strong correction in prices. Aluminum tends to lag other metals on the way up, but also on the way down,'' said Belda, who reiterated Alcoa's view that the world aluminum market will be 500,000 tonnes short this year. The market for alumina -- smelted from bauxite and the raw material of the metal -- will be about 400,000 tonnes short, he said.þþMichael Cuggino, president of the Permanent Portfolio Family of Funds in San Francisco, noted Alcoa made no warnings and cited strengths in a number of markets, indicating it still perceives the economy is strong in relation to its business.þþAlcoa's results included a charge of about $35 million, or 4 cents per share, for costs associated with a new four-year labor agreement with the United Steelworkers union.þþLast month, unionized workers ratified a new labor contract at Alcoa after the company made contingency plans for a strike. The 4-cent-per-share charge included payment of a signing bonus of $1,500 to each of the approximately 9,000 Alcoa workers whose acceptance of the pact averted a threatened strike.þþ
Source: NY Times
