Aluminum plant

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Aluminum plant

The largest US aluminum producer, Alcoa Inc. recorded in the second-quarter a doubled profit after the prices for the lightweight metal increased overcoming the raw-material costs.

The company’s net income increased to 28 cents per share from only 13 cents per share recorded last year. The analysts from Bloomberg forecast a 33 cents average for an Alcoa share. Actually, the price for a share was of 32 cents, but $38 million of “restructuring and debt tender offer costs and other one-time items” were excluded according to Alcoa’s officials. The company’s sales reached $6.59 billion (that means a 27% increase), overcoming the average of $6.31 billion estimated by seven analysts.

Aluminum’s price has increased in the last year in London because of the increasing demand which came from China, the largest consumer, and from the American automotive and aerospace industries. Klaus Kleinfeld, Alcoa’s CEO, said that he expects the global demand to increase by 12% in 2011. He added that he also expects the demand to “double by the end of the decade” because the Asian countries will buy more cars, aircrafts and trains and will build more blocks.

Alcoa is one of the first companies in the Dow Jones Industrial Average which reports revenues. Its shares are currently being traded at 11.255 euros ($15.58 per share) in Frankfurt. This price is reduced by 2.1% in comparison with yesterday’s price set on the New York Stock Exchange. The shares of Alcoa recorded an increase of 45% in the last year. The company has also recorded an increase by 25% of the cost of goods sold (are excluded the general administrative costs, selling costs) reaching $5.25 billion in sales.

Alcoa’s primary-aluminum production is expected to grow by 30,000 metric tons in the next quarter and also expected are energy costs of $33 million, according to the company’s officials.

Alcoa’s officials are basing their numbers on the assumption that the Chinese demand will increase by 5 to 8 percent because of the disruption generated by the Japanese tsunami. An opposite situation is recorded in Europe and North America where Alcoa had to face lower sales because construction in these countries is “pretty much dead”. Alcoa also expects more demands from the aerospace industry. The demand is supposed to increase by 7% this year. In the same time, it was estimated that the automotive sector will increase its demand by 4 to 8% while the demand of aluminum in the commercial construction sector is expected to grow by 3%.

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