Alumina Looking Good As Alcoa Shines In Q4
Sydney Morning Herald
Saturday January 10, 2004
Alcoa, the world's largest aluminum maker, kicked off what is expected to be busy year for the resources sector with a solid fourth-quarter profit, a result that augurs well for its Australian partner, Alumina.
Helped by strong Chinese demand for alumina and a restructure of the Pittsburgh-based aluminum maker, Alcoa reported a $291 million net profit for the quarter, or 33c a share, compared with a year-earlier net loss of $223 million.
This result, which was in line with market expectations, should be good news for Alumina, which split from the old WMC last year.
Alumina, which derives its earnings from a 40 per cent stake in the Alcoa-managed AWAC joint venture, is expected to hand down its full year results at the end of the month.
UBS is tipping the Melbourne group will post a net profit of about $250 million for 2003, roughly 20 per cent higher than the previous year.
``We believe that continued strength in the alumina markets should support improved earnings," the broker said. ``We expect that alumina prices could remain at inflated levels over the medium term as Chinese demand for this aluminium feedstock remains strong."
Alumina prices have effectively doubled in the past year in US dollar terms at least as Chinese buyers pressure an already tight market for the raw material.
UBS predicts the world's most populous nation will import about 5.3 million tonnes of alumina in 2003, a 16 per cent rise on the previous year.
Alcoa's result was closely watched by resources pundits as it was one of the first blue chip companies to report earnings this quarter, and is expected to be representative of many commodities, especially metal companies.
The latest earnings represent a 4 per cent increase over third-quarter earnings of $280 million.
The price of most metals, including aluminum, gold, platinum and steel, have been climbing higher over the past few months because of increasing demand in China and other parts of Asia.
© 2004 Sydney Morning Herald
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