Alcoa (NYSE:AA) beat analysts’ estimates for profits in the third quarter as demand for aluminum grew.
Earnings came in at 9 cents a share after items, beating estimates of 5 cents a share. Net income dropped to $61 million, or 6 cents a share, down from $77 million, or 8 cents a share, last year in the same quarter.
Even though beating estimates, profits were still down by 21 percent, as expenses increased. During the quarter average realized aluminum prices rose 15 percent.
Sales for the quarter were also up by 15 percent, coming in at $5.3 billion.
A couple of factors helping Alcoa was the declining value of the U.S. dollar and the drop in aluminum inventories by 3.3 percent during the quarter.
Going forward, Alcoa sees increased demand for aluminum from the cutting back of production by Chinese aluminum smelters because of orders from the government to lower their energy usage.
CEO Klaus Kleinfeld said, "In countries such as China, Brazil, India, and Russia, more and more people are moving into the middle class, driving demand in building and construction, transportation, and packaging."
For the full-year outlook, Alcoa increased its aluminum consumption estimate from 12 percent to 13 percent.
In the third quarter aluminum prices averaged $2,110 a metric ton on the LME, up from $1,836 last year in the same period.
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