Alcoa profit edges up more than 3 percent

/ Source: The Associated Press

Aluminum producer Alcoa Inc. said Tuesday its third-quarter profit edged up more than 3 percent, helped by the sale of its stake in China’s largest aluminum maker. But the results fell short of Wall Street expectations.

Net income for the period ended Sept. 30 grew to $555 million, or 63 cents per share, from $537 million, or 61 cents per share, during the same period last year. The results were limited by charges linked to planned asset sales and restructuring, higher petroleum and energy costs, and other expenses.

Revenue fell to $7.39 billion from $7.63 billion during the year-ago period due to the exclusion of the company’s soft alloy extrusion business as a result of a joint venture, lower metal prices, a seasonal downturn and weakness in North American markets.

Analysts polled by Thomson Financial had predicted earnings of 65 cents per share on $7.40 billion in revenue.

Alcoa said its board of directors had authorized the repurchase of up to 25 percent of the company’s outstanding common stock — or about 217 million shares — because of its strong capital structure and healthy cash flows. That’s up from a previously authorized plan to buy back 10 percent of the company’s shares.

Under the earlier plan, Alcoa had bought back 43 million shares, or about 5 percent, by the end of the third quarter.

Alcoa said last month that it had sold its nearly 7 percent stake in Aluminum Corporation of China Ltd., also known as Chalco, for $2 billion. Its 2001 initial investment was less than $200 million.

The company also agreed to sell two U.S. soft-alloy extrusion facilities, including one in Florida, and announced plans to close a third plant.

Last week, Alcoa said it expected to take charges totaling $845 million related to the planned sale of two business units: packaging and consumer products, and automotive castings. It also announced plans to restructure a third business, electrical and electronic solutions. The charges include $600 million for the packaging and consumer business that is associated with income tax.

The moves came after Alcoa failed to acquire Alcan Inc. in July after making a $28 billion hostile bid for the Canadian rival, bowing to mining giant Rio Tinto, which offered $38.1 billion in cash.

“The Chalco sale, combined with proceeds from the upcoming sales of our packaging and auto castings businesses, give us a strong balance sheet, increased flexibility to ramp-up share repurchases, and deliver greater shareholder value,” Alcoa’s chairman and chief executive said in a statement.

Alcoa released the financial results after markets closed. the company’s shares rose $1.42, or 3.7 percent, to close at $39.72, then gained 26 cents in after-hours trading.