Alcoa Corporation (AA) Bundle
A Brief History of Alcoa Corporation
Overview
Alcoa Corporation, a leading producer of aluminum, bauxite, and alumina, has undergone significant transformations in recent years, particularly in 2024. The company completed the acquisition of Alumina Limited on August 1, 2024, enhancing its position in the upstream aluminum sector and simplifying its corporate structure.
Financial Performance
As of September 30, 2024, Alcoa reported consolidated sales of $2.904 billion for the third quarter, compared to $2.602 billion in the same quarter of the previous year. For the nine-month period ending September 30, 2024, total sales reached $8.409 billion, an increase from $7.956 billion in 2023.
| Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Consolidated Sales ($ Million) | 2,904 | 2,602 | 8,409 | 7,956 |
| Net Income ($ Million) | 90 | (168) | (142) | (501) |
| Average Realized Price (Alumina) ($/Metric Ton) | 485 | 362 | 416 | 346 |
| Average Realized Price (Aluminum) ($/Metric Ton) | 2,877 | 2,880 | 2,787 | 2,270 |
Operational Changes
In 2024, Alcoa also announced the full curtailment of the Kwinana refinery in June, which had been in operation since 2014. The company has reduced its workforce from approximately 780 employees to about 300 as of September 2024, with plans for further reductions to around 50 in 2025.
Market Dynamics
The average Alumina Price Index (API) was $496 per metric ton in September 2024, reflecting a 27% sequential increase from the previous quarter. The average London Metal Exchange (LME) price for aluminum was noted at $2,372 per metric ton for the same period.
| Market Metrics | Q3 2024 | Q2 2024 |
|---|---|---|
| Average API ($/Metric Ton) | 496 | 392 |
| Average LME ($/Metric Ton) | 2,372 | 2,486 |
Future Outlook
Looking ahead, Alcoa anticipates total production for the Alumina segment to remain between 9.8 and 10.0 million metric tons for 2024. The Aluminum segment expects production and shipments to be stable, ranging from 2.2 to 2.3 million metric tons and 2.5 to 2.6 million metric tons, respectively.
Dividends and Shareholder Returns
On October 16, 2024, Alcoa's Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on November 15, 2024, to shareholders of record as of October 29, 2024. This marks a continued commitment to returning value to shareholders despite recent operational challenges.
Conclusion of Financial Metrics
As of September 30, 2024, Alcoa reported cash and cash equivalents of $1.313 billion, up from $944 million at the end of 2023. The company continues to navigate the complexities of the aluminum market while focusing on operational efficiency and strategic growth.
| Cash Position | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Cash and Cash Equivalents ($ Million) | 1,313 | 944 |
A Who Owns Alcoa Corporation (AA)
Major Shareholders
As of 2024, Alcoa Corporation (AA) has a diverse ownership structure, with significant institutional and individual investors. The following table outlines the major shareholders and their respective ownership percentages:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | The Vanguard Group | 9.3% |
| Institutional Investor | BlackRock, Inc. | 8.5% |
| Institutional Investor | State Street Corporation | 6.2% |
| Individual Investor | Top 10 Individual Shareholders | 5.0% |
| Institutional Investor | Invesco Ltd. | 4.1% |
| Institutional Investor | Franklin Templeton Investments | 3.4% |
| Institutional Investor | Morgan Stanley | 3.0% |
| Other | Public Float | 60.5% |
Recent Acquisitions and Changes in Ownership
In 2024, Alcoa Corporation completed the acquisition of Alumina Limited on August 1, 2024. This acquisition enhanced Alcoa’s position as a leading upstream aluminum producer globally. Following the acquisition, Alcoa recognized a deferred tax asset of approximately $121 million primarily related to the net operating loss carryforwards from Alumina Limited.
Additionally, on September 15, 2024, Alcoa announced the sale of its 25.1% interest in a Saudi Arabian joint venture to Ma’aden. This transaction involved the issuance of approximately 85,977,547 shares by Ma’aden and $150 million in cash, reflecting an implied share value of $950 million based on the average share price.
Stock Performance and Market Capitalization
As of early 2024, Alcoa Corporation's market capitalization was approximately $5.4 billion, with the stock trading at around $40 per share. The stock has experienced fluctuations due to market conditions, commodity prices, and operational performance.
Dividend Information
Alcoa Corporation declared a quarterly cash dividend of $0.10 per share on October 16, 2024, to be paid on November 15, 2024. This reflects Alcoa's commitment to returning value to shareholders while maintaining financial flexibility.
Conclusion on Ownership Structure
The ownership of Alcoa Corporation as of 2024 reflects a blend of institutional and individual investors, with significant transactions influencing its capital structure. The strategic acquisitions and sales of interests are part of Alcoa's efforts to streamline operations and enhance shareholder value.
Alcoa Corporation (AA) Mission Statement
Overview of Mission Statement
Alcoa Corporation's mission statement focuses on being a leader in sustainable aluminum production. The company aims to innovate and provide high-quality aluminum products while minimizing environmental impact. Their commitment includes enhancing safety, efficiency, and sustainability across their operations.
Key Components of the Mission Statement
- Leadership in Sustainability: Alcoa emphasizes its role in promoting sustainable practices within the aluminum industry.
- Innovation and Quality: The company prioritizes the development of innovative products that meet high-quality standards.
- Employee Safety: A core value is maintaining a safe working environment for all employees.
Financial Performance Indicators
As of the third quarter of 2024, Alcoa's financial performance highlights its operational effectiveness in achieving its mission:
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income (Loss) Attributable to Alcoa | $90 million | $20 million | $(168) million |
| Sales | $2.904 billion | $2.906 billion | $7.956 billion |
| Average Realized Price per Metric Ton of Aluminum | $2,877 | $2,858 | $2,880 |
| Average Realized Price per Metric Ton of Alumina | $485 | $399 | $362 |
| Third-party Shipments of Aluminum (kmt) | 638 | 677 | 1,853 |
| Third-party Shipments of Alumina (kmt) | 2,052 | 2,267 | 6,439 |
Strategic Initiatives
Alcoa's mission is supported by several strategic initiatives aimed at enhancing operational efficiency and sustainability:
- Investing in advanced technologies to improve production processes.
- Implementing rigorous environmental standards to reduce carbon emissions.
- Engaging with stakeholders to foster a collaborative approach to sustainability.
Recent Developments
In recent months, Alcoa has made significant strides in aligning its operations with its mission statement:
- Acquisition of Alumina Limited on August 1, 2024, to strengthen its market position.
- Sale of a 25.1% interest in a Saudi Arabia joint venture to streamline operations.
Conclusion on Mission Alignment
Alcoa's financial metrics and strategic initiatives are reflective of its commitment to its mission. The company continues to focus on sustainable growth while enhancing its product offerings in the aluminum sector.
How Alcoa Corporation (AA) Works
Business Overview
Alcoa Corporation operates primarily in the aluminum industry, engaging in the production of bauxite, alumina, and aluminum products. As of 2024, the company has two main operating segments: Alumina and Aluminum.
Financial Performance
For the third quarter of 2024, Alcoa reported a net income attributable to the corporation of $90 million compared to a net income of $20 million in the second quarter of 2024. The year-to-date net loss attributable to Alcoa was $(142) million, an improvement from $(501) million in the same period of 2023.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|---|
| Net Income (Loss) Attributable to Alcoa | $90 million | $20 million | $(168) million | $(142) million | $(501) million |
| Sales | $2,904 million | $2,906 million | $2,956 million | $8,409 million | $7,956 million |
| Average Realized Price per Metric Ton of Aluminum | $2,877 | $2,858 | $2,880 | $2,787 | $2,880 |
| Average Realized Price per Metric Ton of Alumina | $485 | $399 | $362 | $416 | $362 |
Production and Shipment Volumes
In the third quarter of 2024, Alcoa's third-party shipments included 2,052 kmt of alumina and 638 kmt of aluminum. This reflects a decrease from previous quarters due to lower trading activities and shipment volumes.
| Metric | Q3 2024 | Q2 2024 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Third-party Shipments of Alumina (kmt) | 2,052 | 2,267 | 6,716 | 6,439 |
| Third-party Shipments of Aluminum (kmt) | 638 | 677 | 1,949 | 1,853 |
Cost Structure
Alcoa's cost of goods sold (COGS) for the third quarter of 2024 was $2,393 million. The COGS as a percentage of sales decreased in comparison to the previous quarter, largely due to higher average realized prices of alumina.
| Metric | Q3 2024 | Q2 2024 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Cost of Goods Sold | $2,393 million | $2,533 million | $7,330 million | $7,388 million |
| Depreciation, Depletion, and Amortization | $159 million | $158 million | $466 million | $453 million |
| Interest Expense | $44 million | $26 million | $111 million | $79 million |
Segment Performance
Alcoa’s two operating segments, Alumina and Aluminum, reported the following segment adjusted EBITDA for the third quarter of 2024:
| Segment | Q3 2024 Adjusted EBITDA | Q3 2023 Adjusted EBITDA |
|---|---|---|
| Alumina | $547 million | $132 million |
| Aluminum | $132 million | $373 million |
Market Conditions
The average London Metal Exchange (LME) price for aluminum averaged $2,372 per metric ton in Q3 2024. The Alumina Price Index (API) averaged $496 per metric ton during the same period, marking a 27% sequential increase.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Average LME Price (Aluminum) | $2,372 | $2,486 | $2,270 |
| Average API Price (Alumina) | $496 | $392 | $346 |
Strategic Developments
In 2024, Alcoa completed the acquisition of Alumina Limited on August 1, 2024, for approximately $2.7 billion. This acquisition included the recognition of deferred tax assets valued at $121 million.
Additionally, Alcoa announced plans to sell its 25.1% ownership interest in a Saudi Arabian joint venture, which is expected to close in the first half of 2025.
How Alcoa Corporation (AA) Makes Money
Revenue Streams
Alcoa Corporation generates revenue primarily through the production and sale of aluminum, alumina, and bauxite. As of 2024, the company's sales for the third quarter were reported as follows:
| Product | Third-party Sales (Q3 2024) (in $ millions) | Third-party Sales (Q3 2023) (in $ millions) |
|---|---|---|
| Aluminum | $1,836 | $1,666 |
| Alumina | $996 | $840 |
| Bauxite | $92 | $107 |
| Energy | $37 | $32 |
| Total Sales | $2,898 | $2,601 |
Alumina Segment
The Alumina segment is a significant contributor to Alcoa's revenue. In the first nine months of 2024, third-party sales amounted to $3,067 million, compared to $2,328 million in the same period of 2023. The average realized price per metric ton of alumina for Q3 2024 was $485, up from $362 in Q3 2023.
Aluminum Segment
The Aluminum segment also plays a crucial role in Alcoa’s revenue generation. For the nine months ending September 30, 2024, third-party sales reached $5,335 million, compared to $5,242 million in the same period of 2023. The average realized price per metric ton of aluminum in Q3 2024 was $2,877, slightly down from $2,880 in Q3 2023.
Cost Structure
Alcoa's cost of goods sold (COGS) for Q3 2024 was reported at $2,393 million, compared to $2,533 million in Q2 2024. The decrease in COGS is attributed to lower raw material costs and reduced energy expenses. The breakdown of costs for the nine months ending September 30, 2024, was:
| Cost Category | Amount (in $ millions) |
|---|---|
| Cost of Goods Sold | $7,330 |
| Selling, General, and Administrative Expenses | $195 |
| Research and Development Expenses | $40 |
| Provision for Depreciation, Depletion, and Amortization | $483 |
| Restructuring and Other Charges, Net | $250 |
| Total Costs and Expenses | $8,458 |
Net Income Performance
In Q3 2024, Alcoa reported a net income of $90 million, which is a significant improvement compared to a net loss of $168 million in Q3 2023. The net income attributable to Alcoa Corporation for the nine months ending September 30, 2024, was a loss of $142 million, compared to a loss of $501 million for the same period in 2023.
Market Trends and Pricing
The pricing of aluminum and alumina is influenced by market dynamics, including demand and supply fluctuations. As of Q3 2024, the Aluminum Price Index (API) averaged $496 per metric ton, reflecting a 27% increase sequentially, contributing positively to Alcoa's revenue. The London Metal Exchange (LME) price averaged $2,372 per metric ton, showing a decline from previous quarters.
Operational Efficiency Initiatives
Alcoa has initiated productivity and competitiveness programs aimed at reducing operating costs by approximately 5%, targeting savings of $100 million on a run-rate basis by Q1 2025. This initiative is part of the company’s broader strategy to enhance profitability amidst fluctuating market conditions.
Future Outlook
For the fourth quarter of 2024, Alcoa anticipates increased shipments and improved production costs in its Alumina segment. The total production is expected to remain stable at approximately 9.8 to 10.0 million metric tons, with shipments projected to increase to 12.9 to 13.1 million metric tons.
Debt and Financing
As of September 30, 2024, Alcoa’s total debt stood at approximately $3,719 million. The company has been actively managing its debt profile and financing arrangements to ensure liquidity and operational flexibility in a challenging market environment.
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Article updated on 8 Nov 2024
Resources:
- Alcoa Corporation (AA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Alcoa Corporation (AA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Alcoa Corporation (AA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.