Summary
Alcoa Inc. (now Howmet Aerospace Inc.) reported its financial results for the second quarter and the first six months ended June 30, 2016. Total sales decreased by 10% in the second quarter and 13% in the first six months compared to the prior year, primarily due to lower aluminum and alumina prices, as well as decreased volumes in upstream operations. Net income attributable to Alcoa also saw a decline, dropping by $5 million in the second quarter and $184 million in the first six months year-over-year. This decrease was largely attributed to lower pricing across operations and costs associated with the planned separation of the company. The company is actively managing its portfolio through restructuring initiatives, including permanent plant closures and employee separations, which contributed to lower restructuring charges in the current period compared to the prior year. The separation into two independent companies, Alcoa Corporation and Arconic Inc. (which will be the new name for Alcoa), is targeted for the second half of 2016 and is a significant strategic event to watch. The company's liquidity remains a key focus, with cash used for operations in the first six months of 2016, contrasting with cash provided in the prior year, primarily due to lower operating results and changes in working capital.
Financial Highlights
51 data points| Revenue | $3.23B |
| R&D Expenses | $32.00M |
| SG&A Expenses | $239.00M |
| Operating Expenses | $4.96B |
| Operating Income | $283.00M |
| Interest Expense | $124.00M |
| Net Income | $135.00M |
| EPS (Basic) | $0.27 |
| EPS (Diluted) | $0.27 |
| Shares Outstanding (Basic) | 438.00M |
| Shares Outstanding (Diluted) | 452.00M |
Key Highlights
- 1Sales decreased by 10% in Q2 2016 and 13% in the first six months of 2016 compared to the prior year, driven by lower aluminum/alumina prices and reduced volumes.
- 2Net income attributable to Alcoa decreased to $135 million in Q2 2016 and $151 million in the first six months of 2016, compared to $140 million and $335 million, respectively, in the prior year periods.
- 3Restructuring and other charges significantly decreased in Q2 and the first six months of 2016 compared to the same periods in 2015, reflecting ongoing portfolio adjustments.
- 4The company is undergoing a significant separation into two publicly-traded companies, Alcoa Corporation and Arconic Inc., expected to be completed in the second half of 2016.
- 5Cash used for operations in the first six months of 2016 was $98 million, a decrease from cash provided of $297 million in the prior year's comparable period.
- 6Acquisitions in 2015 (TITAL, RTI International Metals) and divestitures in 2016 (Remmele Medical) are impacting segment performance and the balance sheet.
- 7The company is experiencing pricing pressures across its alumina and aluminum segments, with average realized prices for aluminum down significantly year-over-year.