NEW YORK (Reuters) - Aluminum producer Alcoa Inc on Tuesday posted a quarterly profit that missed analysts' estimates on softer demand, higher costs and sharply lower prices for aluminum.
The company said it was taking a number of measures to maximize profits and preserve cash as the economy falters, including reviewing under-performing assets, curtailing non-critical capital programs and suspending share buybacks.
The company's shares fell 6 percent in after-market trade, after closing at $16.71 on the New York Stock Exchange.
Third-quarter net earnings were $268 million, or 33 cents per share, compared with $555 million, or 63 cents in the same quarter of 2007, the Pittsburgh-based company said.
Last year's third-quarter earnings included a gain of $218 million, or 25 cents per share, on the sale of ALCOA (AA.NY)s stake in China's Chalco.
The latest quarter results, which ended September 30, included charges of 10 cents an operating share for the curtailment of a smelter in Texas and the negative impact of currency translations.
Revenue was $7.2 billion, down from $7.4 billion a year earlier, as the price of aluminum dropped 28 percent during the quarter, from $3,375 per ton on July 1 to $2,415 on Sept 30.
Analysts on average were expecting earnings of 50 cents per share and revenue of $7.139 billion, according to Reuters Estimates.
"Despite rising costs and sluggish end markets, combined profitability in the four business segments was in line with last year's third quarter," said President and Chief Executive Officer Klaus Kleinfeld.
"Recently, aluminum prices have fallen steeply and demand has softened further, while input costs remain high," said Kleinfeld.
"The resulting margin squeeze will have a greater impact going forward, but will be somewhat mitigated by the easing of energy prices and a stronger U.S. dollar. We will continue to manage our business to keep it competitive in a turbulent global environment."
Earlier on Tuesday, Morgan Stanley lowered its 2008 and 2009 earnings estimates on Alcoa and cut its price target on the company's shares to $30 from $47 a share.
"Slowing global growth, risks with the financial crisis and rising aluminum stocks are weighing on aluminum fundamentals," said Morgan Stanley analyst Mark Liinamaa, in a note to clients.
The investment bank cut its 2008 earnings forecast for Alcoa by 27 percent and its 2009 view by 40 percent.
"While we remain structurally bullish on the longer-term prospects for aluminum, a combination of rising exchange inventory, slowing global growth and the current financial crisis suggest prices will lag our previous expectations," said Liinamaa.
(Reporting by Steve James; Editing by Bernard Orr)
