Alcoa’s Q4 2016 Earnings Review: Higher Commodity Prices And Productivity Improvement Initiatives Boost Results

January 25th, 2017 by Trefis Team
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Alcoa Corporation (NYSE:AA) released its Q4 2016 earnings results and conducted a conference call with analysts on January 24. [1] As expected, higher aluminum and alumina prices drove a significant improvement in the company’s results. The prices of both these commodities have benefited from global production curtailments in response to an extended period of subdued prices. Alcoa also curtailed high cost production capacity over the past year, with the company’s alumina and aluminum production declining around 15% year-over-year in Q4 2016. [2] In addition, the company had instituted measures to enhance the productivity of its operations in order to counter a subdued pricing environment. These measures helped prop up the company’s Q4 results, as illustrated by the tables shown below. Going forward, Alcoa’s leaner and lower cost operations will allow the company to benefit from higher commodity prices.

The Q4 2016 earnings release is the first as a standalone company for Alcoa Corporation, which primarily represents the upstream businesses of the undivided Alcoa. We will create a new model for Alcoa Corporation’s stock post the release of the company’s 10-K.

AA Q4 2016 Earnings Review

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Have more questions about Alcoa? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Alcoa

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Notes:
  1. Alcoa’s Q4 2016 Earnings Call Transcript, Seeking Alpha [↩]
  2. Alcoa’s Q4 2016 Earnings Release, SEC [↩]