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Sep 30, 2022
Alcoa Q3 2022 Earnings Report
Alcoa reported third quarter results reflecting lower alumina and aluminum prices, coupled with increased energy and raw material costs.
Key Takeaways
Alcoa reported a challenging third quarter with a net loss of $746 million, primarily due to lower alumina and aluminum prices, higher energy and raw material costs, and restructuring charges. Despite these challenges, Alcoa maintained a strong balance sheet and returned cash to stockholders.
Revenue decreased 22% sequentially to $2.85 billion due to lower alumina and aluminum prices.
Recorded a net loss of $746 million, or $4.17 per share, including $652 million of restructuring charges.
Completed a $1 billion pension annuity transaction, transferring approximately $3.3 billion of pension obligations since 2018.
Mitigated high energy prices in Europe by curtailing production capacity at the Lista smelter and reducing production at the San Ciprián refinery.
Alcoa
Alcoa
Alcoa Revenue by Segment
Revenue by Segment
Third-party bauxite sales Revenue
CapyFin.comThird-party alumina sales Revenue
CapyFin.comThird-party aluminum sales Revenue
CapyFin.com Forward Guidance
Alcoa expects total Aluminum segment shipments to remain unchanged from the prior projection, ranging between 2.5 and 2.6 million metric tons in 2022. In Alumina, the Company has decreased its 2022 projection for shipments to range between 13.1 and 13.3 million metric tons, a reduction of 0.5 million metric tons from the prior projection primarily due to the reduced production at the San Ciprián refinery and lower shipments from the Australian refineries. In Bauxite, the Company has decreased its 2022 projection for annual bauxite shipments to range between 43.0 and 44.0 million dry metric tons, a decrease of 1 million dry metric tons from the prior projection due to lower demand from the Australian refineries.
Positive Outlook
- Higher sequential profitability is expected in the Bauxite segment with increased third-party shipments.
- Lower energy costs are anticipated for the San Ciprián refinery during the fourth quarter.
- Benefits of the San Ciprián curtailment are expected to offset the impact of lower bauxite quality in Australia and higher raw materials costs.
- Lower energy costs are expected at the Lista smelter.
- Potential adjustment of approximately $25 million in the fourth quarter to reverse amounts accrued in cost of goods sold for 2022 credits earned through September 30, 2022.
Challenges Ahead
- Higher raw materials costs in the Aluminum segment.
- Lower Warrick power plant sales.
- Lower value add product premiums.
- Decreased 2022 projection for Alumina shipments.
- Decreased 2022 projection for annual Bauxite shipments.
Revenue & Expenses
Visualization of income flow from segment revenue to net income