Lower aluminum prices weigh on Alcoa earnings

Yahoo Finance anchors discuss Alcoa earnings missing estimates as aluminum prices fall.

Video Transcript

JULIE HYMAN: But one more right now, Alcoa is what we're talking about. The shares down about 4%. It's actually not down nearly as much as it was in pre-market trading. But Alcoa reporting worse than estimated results in the quarter here. Adjusted EBITDA down 71% here and coming in below estimates. As we talk about lower demand for certain things, Alcoa certainly seems to be falling into that category here.

And we've also talked a lot about, by the way, a rollover in certain commodity prices, right? That's something that we talked about recently with the likes of Cathie Wood, for example. And here's an area where there is perhaps some of that pain being felt.

BRIAN SOZZI: Yeah, another forward-looking company, just like we talked about with Knight. And I'm looking at this stat right now in terms of production for Alcoa. They produced 497,000 metric tons of aluminum in the quarter. That was relatively flat versus what they produced in the second quarter.

So, to me, that is really indicative of a global economy slowing down. And you have to wonder, well, does it accelerate into the fourth quarter, or does it slow further? And we're sitting here three months from now, and Alcoa's output or production is now declining. You would have to think it's going to decline.

BRAD SMITH: Yeah, you're looking at an operation right now for them that even the leadership has had to acknowledge is somewhat unstable right now. They mentioned within this release, as we move forward, we're focused on some of the items in our direct control, including boosting operational stability, advancing some of their technologies, and then having some of their more sustainable product offerings so that they can benefit from the positive long-term fundamentals for the aluminum industry.

But at least, in this most recent quarter, what they did see was lower prices. They saw higher costs for energy and raw materials. And they were still trying to maintain a strong balance sheet throughout all of that, too.

JULIE HYMAN: Not easy.

BRIAN SOZZI: Not easy.

JULIE HYMAN: Not easy to do.

BRIAN SOZZI: And they get paid very well. They get paid very well to navigate these challenges, Julie.

JULIE HYMAN: If they get paid in stock, then they get paid a little less right now than they did.

BRIAN SOZZI: They're also getting bonuses.

JULIE HYMAN: Yes, it's true. Good point.