Alcoa expects strong results

Pittsburgh-based aluminum giant Alcoa is expected to post a profit in its fourth quarter earnings report today, signaling the continuation of the commodityÔÇÖs recovery.  The weaker US dollar, in which most commodities are priced, as well as a rebound in global demand for vehicles and household consumer goods, has helped to boost aluminum prices to around $1 a pound, from 60 cents last February. Other commodities, such as copper, lead and zinc, have seen their prices more than double over the course of 2009. Commodities have been leading the market in much of the global recovery thus far. They are expected to lead all sectors by producing year-on-year fourth quarter earnings growth of more than 160 percent, according to Thomson Reuters. Alcoa shares have risen by 32 percent over the past month, and closed Friday at $17.02, above analysts' average target price of $16. Operating across 44 countries, Alcoa is the third-largest producer of aluminum in the world, behind Rio Tinto Alcan and Rusal. Following a return to profitability in the third quarter, Klaus Kleinfeld, Alcoa president and CEO, said: 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. 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 In the third quarter, the companyÔÇÖs aluminium operations saw a $72 million improvement from the second quarter, with production increasing nine percent or by 305 thousand metric tons. Rising prices are a significant aid for companies such as Alcoa; however, there are concerns surrounding overcapacity in the aluminum industry and the risk that demand could be slowed by a sluggish recovery. Analysts will be scrutinizing AlcoaÔÇÖs results for signs of improvement beyond aluminum prices, such as increased sales volumes. AlcoaÔÇÖs results mark the unofficial opening of the fourth quarter earnings season. It is expected that most year-on-year comparisons from businesses delivering their fourth quarter results will be favorable, due to the poor trading conditions of the same period in 2008.  *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *