By Steve James
NEW YORK (Reuters) - ALCOA (AA.NY)Inc
Wall Street had expected another loss for the aluminum producer but Alcoa on Wednesday said its third-quarter net earnings were $77 million, or 8 cents per share, compared with earnings of $268 million, or 33 cents per share in the same quarter of 2008.
The bullish news from the first member of the Dow Jones Industrials <.DJI> to report results for the latest quarter was likely to boost Wall Street when the markets open on Thursday.
"This is the type of company that provides the raw material people need to meet production demands. It's a good measure of where we stand (with) the economy," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
Alcoa attributed the positive results to cost savings and an increase in aluminum prices, and said there are signs that key markets are stabilizing in the second half of this year.
Excluding restructuring and one-time items, the profit was $39 million, or 4 cents per share -- smashing analysts' average forecast of a loss of 9 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell to $4.6 billion from $7.00 billion a year earlier, but was 9 percent higher than the second quarter and higher than analysts' average estimate of $4.55 billion, according to Thomson Reuters I/B/E/S.
During the third quarter, the price of aluminum rose 16 percent to $1,890 per metric ton.
"It's a pretty big improvement. For once it looks like the cost-cutting initiatives have really taken hold, and the company has really streamlined itself during these softer economic times," said Brian Hicks, portfolio manager at U.S. Global Investors in San Antonio.
Alcoa said aluminum demand was on the rise globally and the company was weathering the world economic crisis well.
"Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11 percent in the second half of 2009," it said in a statement.
"The financial and operational measures we took in the first half of the year are having a strong positive impact on our cash position and profitability," said President and Chief Executive Officer Klaus Kleinfeld. "
"Despite unfavorable currency and energy headwinds, our performance this quarter indicates that Alcoa is weathering the economic storm and is in excellent shape to benefit when the market recovers."
The economic downturn has affected most of Alcoa's end markets -- automotive, commercial transportation, building and construction, and aerospace.
But in July, Kleinfeld said there were signs that weak aluminum demand -- which has prompted production cuts and plummeting metals prices in the last year -- might be easing.
Alcoa stock rose 86 cents to $15.06 after closing at $14.20 on the New York Stock Exchange.
(Reporting by Angela Moon, Carole Vaporean, Ernest Scheyder and Caroline Valetkevitch in New York and Braden Reddall in San Francisco; Editing by Gary Hill)
