Alcoa posts surprise profit

The worldÔÇÖs third largest aluminum producer, Pennsylvania-based Alcoa Inc, has announced surprise third quarter profits thanks to an increase in worldwide aluminum demand.  The results beat the expectations of analysts, who predicted the Pittsburgh company to post a loss for the period ending September 30.  AlcoaÔÇÖs total revenue was up nine percent from the previous quarter, with profits reaching $77 million.  Alcoa said that rising demand across several industries, notably the automotive sector, had lifted its revenue compared with the preceding three months. The companyÔÇÖs sales to automakers rose by 21 percent from the previous quarter.  The aluminum requirement for vehicles may have risen as a result of automakers striving to meet new fuel economy standards by making vehicles lighter.  However, Alcoa said aerospace deliveries look to be flat for 2009, with resulting backlogs due to last several years. Aluminum rose in price from the previous three months by about 20 percent during the quarter.  ÔÇ£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,ÔÇØ said Klaus Kleinfeld, AlcoaÔÇÖs president and CEO.  ÔÇ£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.ÔÇØ The company has now forecast an 11 percent increase in worldwide aluminum demand in the second half of the year, pushed up by notably strong demand from China. Since the beginning of the global downturn, Alcoa has embarked on a robust cost-cutting process and has also idled its smelting capacity by 20 percent, compared with an industry average of 17 percent, following a fall in orders.  The company reportedly reviews almost daily whether to idle or restart capacity on a regional basis.  The quarterÔÇÖs results have come as a relief after three consecutive quarters of losses. The group is traditionally the first company in the Dow Jones industrial average to report quarterly earnings, and its results are therefore watched closely for signs of economic recovery.  Alcoa employs approximately 63,000 people in 31 countries worldwide.  * ┬á┬á┬á┬á┬á┬á┬á*┬á┬á┬á┬á┬á┬á┬á *