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Arconic slashes full-year revenue guidance

Yahoo Finance Live anchors discuss Arconic slashing its full-year revenue guidance amid high energy costs.

Video Transcript

BRAD SMITH: Guys, switching gears here, some ugly guidance coming out of Arconic, ticker symbol ARNC. We're seeing shares move lower here early in trade, down by about 7.4%, cutting down some of their guidance for the remainder of the year, as revenue expectations are now in the range of $9.2 billion to $9.5 billion compared with the prior expected range of $9.6 billion to $10 billion. This due to increased energy costs, EU demand, and Deutsche Bank lowered its price target on Arconic from $34 to $29 there. And so those some of the new financials that we should be expecting from the company.

JULIE HYMAN: Yeah, Arconic-- part of what's going on here is also maintenance at the company that is unexpected. A lot of this the company is delacquering lacking its equipment in a Tennessee facility.

BRIAN SOZZI: Delacquering?

JULIE HYMAN: And they have some seasonality on the European facilities as well-- mechanical issues, electrical issues. So in addition to whatever else is going on out in the world, they've got that to contend with as well.

BRIAN SOZZI: Gosh, I love that, delacquering. But look, this is-- this is, I would say, gives you a-- maybe one of the first true snapshots into the third quarter for industrial makers. And judging-- some quick math by me, about $45 million below estimates in terms of adjusted operating profits for Arconic here. Part of that seems to be just self-inflicted, but still not a good signal in terms of overall global demand. And you have to wonder, how is this next earnings season going to play out? It may not play out great.

BRAD SMITH: This comes just a day after we were talking about Nucor putting out their revised guidance to the downside as well. It makes you wonder, on the materials side and what is being priced in here, what they're seeing coming through right now in demand that they have to start to initiate some of the updates in the guidance moving forward at this point.

JULIE HYMAN: And just one tiny history lesson. Remember, Arconic is spun off from Alcoa. Alcoa makes raw aluminum. Arconic makes the stuff that you make from aluminum, the finished product, so--

BRIAN SOZZI: You've got to do a Yahoo U on that, Julie. I like that. It's good.

JULIE HYMAN: It was just a mini one.

BRIAN SOZZI: Mini one.

JULIE HYMAN: We don't need anything more than that.