Alcoa’s Q3 2016 Earnings Review: Productivity Improvement Initiatives Drive Improvement In Results

by Trefis Team
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Alcoa’s continuing productivity improvement initiatives boosted the company’s Q3 earnings results, though the reported EPS was slightly below market expectations. Given the weakness in alumina and aluminum prices over the past few years, Alcoa has identified productivity improvement as a major area of focus for the company. Apart from improving operational efficiency, the company has also been shutting down high-cost production capacity, particularly pertaining to the company’s upstream businesses. The savings from the company’s productivity improvement initiatives offset the impact of lower alumina prices, unfavorable currency movements, and higher labor and maintenance related costs on the company’s results. In addition, customer adjustments to delivery schedules in the aerospace end markets weighed on the results of the value-added business segments. [1] Going forward, the company’s planned split of its upstream and value-added operations will be implemented from November 1. The planned split will separate the company’s value-added segments, with robust long-term demand, from the aerospace and automotive end markets, from its commodity businesses, which have been characterized by subdued pricing for the past few years.

AA Q3 2016 Earnings 1

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1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Alcoa

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  1. Alcoa’s Q3 2016 Earnings Call Transcript, Seeking Alpha []
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