Via Bloomberg Press
By Rob Delaney
Alcoa Inc., the aluminum maker that just reported its first back-to-back losses in 15years, is counting on productivity gains and China’s economic-stimulus plan to prop up results as demand keeps falling throughout 2009.
Chief Executive Officer Klaus Kleinfeld said yesterday that the company will save $400 million a year by reducing its payroll and trimming other costs. China will be the only market where demand for the metal doesn’t drop this year as the nation’s $585 billion economic stimulus takes effect, he said.
“If they can continue with the cost reductions, their earnings should be significantly better” in the second quarter, Chuck Bradford, a metals analyst at Bradford Research Inc., said in a telephone interview. Still, Alcoa may post another loss because of a “huge inventory overhang” that is depressing aluminum prices.
World aluminum consumption will drop 7 percent in 2009, and sales may decline as much as 15 percent in global building markets and 18 percent to automotive customers, the company told analysts and investors in a presentation yesterday.