Business Case Study: Alcoa Inc.
Alcoa Inc.
For the quarter ended 30th September 2015, Alcoa Inc. reported revenue of $ 5.6 billion which was 11 % below that reported for the same period last year. The main reason behind this decline in revenue was the divestiture and closure of low margin business and the dent that aluminium price have continued to take in the most recently ended quarter. The net income was $ 44 million down from $ 149 million of third quarter 2014. Adjusted net income was $ 109 million translating into an EPS of $ 0.07. Adjusted net income was down 70.5 % and EPS was down 77 % compared to the third quarter of last year.
Shipment of aluminium by the company has been declining continuously since the prices are falling and the company is also cutting production. …show more content…
The actual demand growth has been ahead of Alcoa’s forecasts and the company is expecting global aluminium deficit for the next year. The company banks on the industrial growth in North America and Europe for the global demand growth that it expects. Based on its industrial growth projections, Alcoa has upped or maintained the projections for the industries like automobile, construction and packaging to which it is a supplier. On the other hand the company is not very excited about China near term future. Alcoa has lowered its forecast for every industry that it supplies in …show more content…
Days Working Capital (DWC) improved by 1 day compared to last year without considering the acquisitions. With acquisitions however, it increased eight days. Operating cash flow was $ 420 million while free cash flow was $ 152 million. Thus the company is already cash positive and it will get even better at that because of its focus on reducing its DWC going forward. And an improvement in the cash position is definitely required as the company has only $ 1.7 billion of cash against $ 9.3 billion of total debt. The free cash flow target for the year is set at $ 500 million for full year
For the quarter ended 30th September 2015, Alcoa Inc. reported revenue of $ 5.6 billion which was 11 % below that reported for the same period last year. The main reason behind this decline in revenue was the divestiture and closure of low margin business and the dent that aluminium price have continued to take in the most recently ended quarter. The net income was $ 44 million down from $ 149 million of third quarter 2014. Adjusted net income was $ 109 million translating into an EPS of $ 0.07. Adjusted net income was down 70.5 % and EPS was down 77 % compared to the third quarter of last year.
Shipment of aluminium by the company has been declining continuously since the prices are falling and the company is also cutting production. …show more content…
The actual demand growth has been ahead of Alcoa’s forecasts and the company is expecting global aluminium deficit for the next year. The company banks on the industrial growth in North America and Europe for the global demand growth that it expects. Based on its industrial growth projections, Alcoa has upped or maintained the projections for the industries like automobile, construction and packaging to which it is a supplier. On the other hand the company is not very excited about China near term future. Alcoa has lowered its forecast for every industry that it supplies in …show more content…
Days Working Capital (DWC) improved by 1 day compared to last year without considering the acquisitions. With acquisitions however, it increased eight days. Operating cash flow was $ 420 million while free cash flow was $ 152 million. Thus the company is already cash positive and it will get even better at that because of its focus on reducing its DWC going forward. And an improvement in the cash position is definitely required as the company has only $ 1.7 billion of cash against $ 9.3 billion of total debt. The free cash flow target for the year is set at $ 500 million for full year