Dallas, Texas 07/09/2015 (Financialstrend) – Alcoa Inc (NYSE:AA) posted a slight increase in Q2 profit but still fell short of the Street’s estimates. During the quarter, the company felt the full effects of lower metal prices on an increase in exports from China. The company expects Chinese exports to slow heading into Q4 as prices continue to drop.
Depressed Aluminum Prices
The slight increase in profit was down to a strong performance of the aerospace and automotive divisions that continue to offset global aluminum glut amidst depressed prices. Alcoa Inc (NYSE:AA) posted a profit of $140 million compared to $138 million generated last year same quarter. Revenues for the quarter were up by 1% coming in at $5.9 billion.
A 10% drop in the prices of aluminum to $1,700 a ton is still a point of concern for the company as China continues to flood the market with all kinds of industrial metals. For the first five months of the year, China’s aluminum exports were up by 30% compared to last year’s levels to 2.9 million tons.
The flooding of the market with Aluminum has forced Alcoa Inc (NYSE:AA) to focus more on being a company that produces aluminum and titanium parts for cars instead of being an aluminum pure play. Orders from car and plane companies are gradually increasing an opening expected to offer more synergies for sales and growth.
Cost Cutting Measures
Alcoa Inc (NYSE:AA) has been forced to close down some smelters that have relatively high expenses as it initiates cost-cutting measures in response to low aluminum prices. The company has slashed its smelting operating capacity but 1.5 million tons since 2007
Alcoa Inc (NYSE:AA) has joined Rusal in blasting China for swelling the markets with supply that has resulted in a plunge in aluminum prices. The company has already doubled its forecast for aluminum oversupply. Even as China maintains that a rise in exports is not part of their policy, there are fears that aluminum supply will outpace demand by 400,000