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Alcoa Kicks Off Earnings Season With a Beat

CNBC with Reuters
Stephen Morton | Bloomberg | Getty Images

Alcoa (AA), the first out of the gate with second-quarter earnings, delivered a beat on both earnings and revenue.

After the earnings announcement, the company's shares gained in extended-hours trading. (Click here to get latest quote.) (AA)

"We see that the aluminum fundamentals are very strong. We expect a growth for this year of physical demand of 7 percent," Alcoa CEO Klaus Kleinfeld told CNBC. "I can't predict where the metal price is going to go. I tend to believe we're seeing a low at this point."

The company said its net loss in the quarter was $119 million, or 11 cents per share. That compares with a loss of $2 million, or break-even per share, a year earlier.

The company paid down debt of $566 million during the second quarter.

Excluding items, earnings rose to 7 cents a share from 6 cents a share a year ago.

Revenue decreased to $5.85 billion from $5.96 billion a year ago.

Analysts had expected the aluminum maker to report earnings excluding items of 6 cents a share on $5.83 billion in revenue, according to a consensus estimate from Thomson Reuters.

Alcoa said it had positive free cash flow of $228 million during the quarter.

"It was nice to see their free cash flow was positive in the quarter. That was probably the biggest positive in the quarter. Three of their last five quarters had negative free cash flow," said Jonathan Pavlik, a portfolio manager at Steward Capital. "In light of their recent downgrade, it was also nice to see them cut their debt."

The company is often viewed as a bellwether for the materials sector, and some look to it for hints on the health of the broader economy.

-By CNBC with Reuters

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