Alcoa Corporation (AA) recently stated second quarter 2k19 results that include several actions to improve the Aluminum section’s portfolio and further strengthen the Company. “In the second quarter, our Aluminum section rebounded despite weaker metal prices, and we stated a solid cash balance, even after sizeable cash outlays,” stated President and Chief Executive Officer Roy Harvey. “We also maintained strong operational performance across all of our businesses.”
In the second quarter, Alcoa stated adjusted EBITDA not including special items of $455M, down slightly from the previous quarter, primarily Because of lower pricing for both alumina and aluminum that was partially offset by higher energy sales and lower costs for raw materials.
Alcoa stated second quarter revenue of $2.7B, which is flat sequentially.
Alcoa ended the quarter with cash on hand of $834M and debt of $1.8B, for net debt of $1.0B.
In the second quarter, cash from operations was $82M, which reflects payments of $306M for previousyear income taxes. Cash used for financing activities was $71M and cash used for investing activities was $199M, which included contributions totaling $100M made as part of the MRC divestiture. Free cash flow was negative $7M.
2k19 Outlook
The Company’s 2k19 shipment outlook for Bauxite, Alumina and Aluminum remains unchanged from the previous full-year estimates. Total yearly bauxite shipments are predictable to range between 47.0 and 48.0M dry metric tons. Total alumina shipments are projected between 13.6 and 13.7M metric tons with anticipated operational improvements and higher year-on-year production. Aluminum shipments are predictable to be between 2.8 and 2.9M metric tons.
In the third quarter of 2k19, Alcoa expects benefits from higher volumes and lower costs for raw materials and maintenance in the Alumina and Bauxite sections. In the Aluminum section, the Company expects improvements primarily from lower alumina costs.
Market Update
For full-year 2k19, Alcoa continues to project a global aluminum deficit, ranging between 1.0M and 1.4M metric tons, down from last quarter’s estimate of a deficit between 1.5M and 1.9M metric tons.
Global aluminum demand growth for 2k19 is estimated to range between 1.25 percent and 2.25 percent, down from 2 percent to 3 percent in the previous quarter, driven by lower demand in both China and the world ex-China Because of trade tensions and macroeconomic headwinds. Even so, aluminum inventories, measured in days of consumption, continue to decline and are predictable by year’s end to reach levels not seen in over a decade, since before the Global Financial Crisis in 2008.
In the alumina market, Alcoa projects a global surplus for 2k19, ranging between 500 thousand metric tons and 1.3M metric tons, up from last quarter’s estimate of 200 thousand metric tons to 1M metric tons. Environmentally-driven Chinese alumina curtailments were outweighed by the combination of a refinery restart in the Atlantic region and lower alumina demand from worldwide smelting production.
EPS growth for this year is -6.00% and EPS growth for next year is expected to reach at 5833.30%. EPS growth in past five years was 15.70% while sales growth past 5 years was measured at 1.30%. In the liquidity ratio analysis; quick ratio for most recent quarter was 0.80 while current ratio for time period was 1.50.
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