Alcoa Inc. (AA) has beaten its carbon reduction goal a decade early. According to the company’s 2010 sustainability report, the company cut its greenhouse gas emissions to 22% below 2005 levels, exceeding a 2020 goal of a 20% reduction. Alcoa lowered its 2010 carbon intensity to 7% below 2009 levels, driven by the energy efficiency improvements, repositioning of operations to take advantage of hydroelectric power, and other changes.
According to the report, Alcoa was also the first company to receive silver-level Cradle to Cradle Certification for primary aluminum. The results are part of the company’s long-term approach to sustainability.
In 2010, the company also saw improvements in energy intensity, freshwater intensity and landfilled waste.
But mercury emissions rose by 7% from 0.256 to 0.274 grams per metric ton of alumina produced, pushing Alcoa further off its 2020 target of 0.046 grams per metric ton (an 80% reduction from a 2005 baseline).
Likewise the company moved away from its 2020 goal on mine rehabilitation, with the five-year rolling average ratio of area disturbed to area rehabilitated rising from 1:1 in 2009 to 1.15:1 in 2010. The 2010 increase was due to the opening of a new mine area at Juruti, Brazil, and the 2009 acquisition of mines from BHP Billiton. For 2011, the company expects a ratio of 0.75:1.
Recently, the company released its first-quarter results posting an EPS of 28 cents and exceeding the Zacks Consensus Estimate by a penny. This includes the impact of special items or 1 cent per share, excluding which the EPS came in at 27 cents per share.
Revenues for the quarter were $5.96 billion, missing the Zacks Consensus Estimate of $6.112 billion. Revenues, however, increased 22% year over year, aided by the rising prices of aluminum and alumina.
The company posted improved profits across all its segments. This was followed by revenue growth in the end markets led by double-digit increases in packaging, automotive, commercial transportation and industrial products.
The company remains optimistic about the remainder of 2011 and is confident of generating positive results. Its optimism stems essentially from the fact that its primary raw material, aluminum, possesses some unique qualities, capable of generating huge demand in the market. The metal is light, easy to use and reusable and thus has a competitive edge over other metals. Alcoa has reaffirmed that global aluminum demand would grow 12% in 2011.
Alcoa Inc., a Pennsylvania-based corporation, is among the world’s leading producers of primary and fabricated aluminum and alumina. It involves the technology of mining, refining, smelting, fabricating and recycling of aluminum. We believe that Alcoa’s cost reduction efforts are, to some extent, offsetting the negative impact of higher energy and raw material costs on profitability.
The company is divesting underperforming assets through its restructuring program. The annual global consumption of aluminum products, both upstream and downstream, is expected to double over the next 15 years. This consumption boom will be driven primarily by growth in China, India, Russia and Brazil, whose demographics are accelerating development.
Currently, Alcoa has a short-term (1 to 3 months) Zacks #3 Hold rating and a long-term (6 months) Neutral recommendation.
Alcoa faces stiff competition from Aluminum Corporation Of China Limited (ACH), Rio Tinto Plc. (RIO) and BHP Billiton Ltd. (BHP).
ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis Report
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