Aluminum giant, Alcoa Inc. (AA) announced that its global line of wheel products have been Cradle to Cradle Certified by McDonough Braungart Design Chemistry (MBDC) at the Silver level driven by the production processes that are environmentally safe and healthy, and aluminum that is infinitely recyclable.
The company’s wheels products are the first in the transportation industry to receive certification from the Cradle to Cradle Certified Program. MBDC, a global sustainability consulting and product certification firm, developed the Cradle to Cradle concept in 1995. Sustainability forms an integral part of Alcoa’s products and this certification ensures that the company provides its customers the most safe and environmentally-conducive products.
MBDC assesses products for safety to human and environmental health, designs products for future use cycles, and sustainable manufacturing processes. Products are evaluated on a number of grounds like material health, material reutilization, renewable energy use, water stewardship and social responsibility.
Alcoa released its first-quarter 2012 results in April. The company reported earnings of 9 cents per share in the quarter compared with a loss of 18 cents in the fourth quarter of 2011. However, it came below the earnings of 27 cents a share recorded in the first quarter of 2011.
Excluding restructuring charges and other items, Alcoa's profit came in at 10 cents per share, beating the Zacks Consensus Estimate of a loss of 4 cents. The impressive results coupled with the company’s bullish outlook pushed its stock price by 5.4% to $9.82 in after-hours trading. Higher production and volumes as well as improved market conditions drove Alcoa’s results.
Quarterly revenues increased by 0.3% sequentially to $6,006 million and edged up 0.8% over the prior-year quarter. It surpassed the Zacks Consensus Estimate of $5,735 million. The increase in revenues was driven by strong results in Global Rolled Products and Engineered Products and Solutions.
For 2012, Alcoa expects global aerospace market to grow by 3 percentage points to 13%-14%. The company also expects global growth for the automotive sector to be in the range of 3%-7%, commercial transportation in the range of 1%-5%, packaging in the range of 2%-3%, building and construction in the range of 2.5%-3.5%, and industrial gas turbine in the band of 1%-2%.
The company believes that there will be a deficit in global aluminum supply in 2012. Besides, Alcoa reiterated its expectation that aluminum demand will grow by 7% globally in the year.
Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. It competes with Aluminum Corporation Of China Limited (ACH) and RioTinto plc. (RIO)
We believe that the Alcoa’s cost reduction measures are offsetting the negative impact of higher energy and raw material costs on its profitability to some extent. The company aims to reduce costs in its upstream business and achieve record profits in its mid stream and downstream businesses. It is also divesting underperforming assets through its restructuring program.
Currently, the stock maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating. We have a long-term “Neutral” recommendation on the shares of the company.
ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis Report
RIO TINTO-ADR (RIO): Free Stock Analysis Report
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