Write-down of smelting operations sends Alcoa to $2.3 billion loss in 4Q, revenue falls

DALLAS – Alcoa Inc. reported a $2.34 billion fourth-quarter loss as it wrote down the value of years-old aluminum-smelting acquisitions to shift its focus to more profitable businesses.

An adjusted measure of profit fell short of Wall Street expectations as revenue fell 5 per cent to $5.59 billion.

Shares slid 3.8 per cent to $10.28 in aftermarket trading.

Alcoa is struggling with stubbornly weak aluminum prices — in the quarter, the company was paid an average of 7 per cent less for the metal than it received in the same period a year earlier. The company is hoping that demand for aluminum in airplanes and autos will help boost prices. It predicted that overall demand would grow 7 per cent this year, the same as in 2013.

Alcoa has idled one-sixth of its smelting capacity. It sees a brighter future in its segments that produce rolled aluminum and engineered products, which accounted for 57 per cent of company revenue in 2013.

In the fourth quarter, the company’s loss equaled $2.19 per share. A year earlier, the company earned $242 million, or 21 cents per share.

The company said Thursday that without the smelting write-downs, restructuring charges and other special items, it would have earned 4 cents per share. Analysts were expecting 6 cents per share.

Its $5.59 billion in revenue beat the forecast of $5.36 billion from analysts surveyed by FactSet.

The company released fourth-quarter results just hours after announcing that a joint venture pleaded guilty to bribing officials in the Middle East kingdom of Bahrain. The affiliate and Alcoa agreed to pay $384 million in penalties.

Separately, a joint venture of which Alcoa owns 60 per cent admitted bribing officials in Bahrain through a London-based middleman. The affiliate, Alcoa World Alumina LLC, will pay $223 million in fines and criminal penalties for violating a federal law against bribing foreign officials, and the parent company agreed to pay a civil penalty of $161 million for related violations of Securities and Exchange Commission rules.

In 2012, Alcoa settled related claims by state-controlled Aluminum Bahrain for $85 million.

CFO William Oplinger told reporters that penalties will be “manageable” because they will be spread over five payments. With the plea deal and the write-down of smelting acquisitions made at least a decade ago, “We’ve put a number of legacy matters behind us,” he said.