Summary
Alcoa Inc. (HWM) reported its second quarter 2010 financial results, showing a significant turnaround from the prior year. The company achieved net income attributable to Alcoa shareholders of $136 million, or $0.13 per diluted share, a substantial improvement from a net loss of $454 million in the second quarter of 2009. This positive shift was driven by a 22% increase in sales, primarily due to higher realized prices for alumina and aluminum, reflecting stronger London Metal Exchange (LME) prices. Cost savings and productivity improvements across all segments also contributed to the improved profitability. For the six months ended June 30, 2010, Alcoa reported a net loss attributable to Alcoa shareholders of $65 million, or $0.06 per diluted share, compared to a net loss of $951 million in the same period of 2009. While still reporting a loss for the year-to-date period, the substantial improvement highlights the company's recovery trajectory. The company also reported substantial improvements in operational efficiency and managed its restructuring charges effectively, though significant legal and regulatory matters, particularly concerning European electricity tariffs, continue to present potential financial risks.
Financial Highlights
54 data points| Revenue | $5.19B |
| Cost of Revenue | $4.21B |
| Gross Profit | $977.00M |
| R&D Expenses | $45.00M |
| SG&A Expenses | $208.00M |
| Operating Income | $137.00M |
| Interest Expense | $119.00M |
| Net Income | $136.00M |
| EPS (Basic) | $0.13 |
| EPS (Diluted) | $0.13 |
| Shares Outstanding (Basic) | 1.02B |
| Shares Outstanding (Diluted) | 1.12B |
Key Highlights
- 1Net income attributable to Alcoa shareholders was $136 million ($0.13 per diluted share) for Q2 2010, a significant improvement from a net loss of $454 million ($0.47 per diluted share) in Q2 2009.
- 2Sales increased by 22% year-over-year to $5.19 billion in Q2 2010, driven by a substantial rise in realized prices for alumina and aluminum.
- 3Cost of goods sold as a percentage of sales improved significantly, from 93.4% in Q2 2009 to 81.2% in Q2 2010, reflecting improved pricing and cost efficiencies.
- 4Restructuring and other charges decreased year-over-year, from $82 million in Q2 2009 to $30 million in Q2 2010, although a larger six-month charge of $217 million in 2010 related to asset impairments and employee layoffs.
- 5The company reported a substantial increase in cash provided from operations of $499 million for the six months ended June 30, 2010, compared to $57 million in the prior year period.
- 6Alcoa faces potential financial risks related to the European Commission's decision on Italian electricity tariffs, estimating a payment between $300 million and $500 million will be required.