Alcoa’s Q2 2017 Earnings Preview: Favorable Pricing Environment To Translate Into Strong Earnings

July 14th, 2017 by Trefis Team
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Alcoa will release its Q2 2017 earnings result and conduct a conference call with analysts on July 19. [1] As Alcoa spun off its value-added businesses into a separate company towards the end of last year, we cannot compare the company’s result in Q2 2017 with that in the corresponding period of last year. However, we expect the company to report strong quarterly earnings numbers driven by a favorable aluminum pricing environment.

LME Aluminum Prices, Source: LME Website

Aluminum prices have risen considerably over the course of the past year, driven by an improved demand outlook. China, the world’s largest consumer of the metal, instituted a fiscal stimulus plan targeting the infrastructure sector last year in order to boost flagging economic growth. [2] In addition, President Trump’s pro-business agenda has raised expectations of higher economic growth and greater U.S. demand for aluminum, a metal with diverse industrial applications. Besides the improved demand outlook, the Chinese government’s plans to shut down excess aluminum smelting capacity in order to tackle a burgeoning pollution problem has provided an additional fillip to aluminum prices. [3] Thus, given the favorable pricing environment, we expect Alcoa to report a strong Q2 earnings result. The following table summarizes our expectations from the company’s earnings release.

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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 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

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Notes:
  1. Alcoa Schedules Second Quarter 2017 Earnings Release And Conference Call, Alcoa [↩]
  2. Fitch: China’s stimulus measures paper over growth slowdown, CNBC [↩]
  3. Beijing Proposes Massive Idling of Chinese Smelters to Combat Pollution, Metal Miner [↩]