Alcoa expected to post 4Q profit on lower revenue

Analysts expect Alcoa to reverse year-ago loss and post 4Q profit despite lower revenue

Associated Press

NEW YORK (AP) -- Aluminum producer Alcoa Inc. launches the fourth-quarter earnings season on Tuesday after the markets close.

WHAT TO WATCH FOR: The sluggish global economy, including slower growth in China and the debt crisis in Europe, has held down aluminum demand and prices, helping push Alcoa to a third-quarter loss and a more cautious outlook.

Two weeks ago Moody's Investor Service warned that it might downgrade Alcoa on weak pricing, which could put the company's credit in junk territory. Alcoa said it is taking steps to reduce debt and protect its investment-grade rating.

WHY IT MATTERS: Alcoa's results get extra attention because it's the first company listed in the Dow Jones industrial average to report earnings and it makes aluminum for many industries including autos, airlines and appliances. Investors scrutinize Alcoa's numbers for hints about the health and direction of the overall economy.

Alcoa's shares fell 2 percent in the fourth quarter but ended 2012 nearly unchanged from where they started — closing at $8.68, up three cents for the year.

WHAT'S EXPECTED: Analysts expect earnings of 6 cents per share on revenue of $5.58 billion, according to a survey by FactSet.

LAST YEAR'S QUARTER: In 2011, Alcoa posted a fourth-quarter loss of $191 million, or 18 cents a share, on revenue of $5.99 billion. Excluding special items, most of which were related to reducing smelting operations, the loss would have been 3 cents per share. Analysts usually exclude one-time items from their forecasts.