Alcoa’s Q4 2016 Earnings Preview: Higher Aluminum Prices And Lower Cost Operations To Boost Results

by Trefis Team
+2.62%
Upside
41.40
Market
42.49
Trefis
AA
Alcoa
Rate   |   votes   |   Share

Alcoa Corporation (NYSE:AA), the successor company comprising the upstream operations of the undivided Alcoa, is set to announce its Q4 2016 earnings results on January 24. [1] This earnings release will be the company’s first as a standalone company. We will be looking out for the company’s year end financial statements in order to build our own model for its stock price. In this article, we will briefly touch upon the major factors that will influence the company’s results.

Aluminum Prices 2016

Alcoa Corporation’s Q4 results and its operations going forward will benefit from a revival in aluminum prices. As illustrated by the chart shown above, aluminum prices have risen steadily over the course of 2016. The increase in aluminum prices over the course of the last year was driven by global production curtailments in response to an extended period of weakness in prices of the commodity. [2] In addition to the improved pricing environment, Alcoa’s results will also benefit from a reduction in the average costs of the company’s aluminum and alumina operations, as illustrated by the tables shown below (the average cost metric reported by the company is a measure that captures all production related costs). Alcoa has shut down high-cost production capacity in both its alumina and aluminum business segments over the past few years, which has helped lower average production costs. The following tables summarize the major factors that will influence the company’s results.

AA Q4 2016 Earnings Preview

Have more questions about Alcoa? See the links below.

Notes:

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 content@trefis.com
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

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology

Notes:
  1. Alcoa To Announce Fourth Quarter And Year-End 2016 Results And Host Webcast, Alcoa News Release []
  2. Global aluminum production is falling, but for how long, Reuters []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!