Alcoa (ASX: AAI) shares are ticked 1.0% lower at noon on Thursday despite reporting better-than-expected December quarter earnings and a mixed 2025 guidance.
“Reflecting on 2024, it was a productive year for Alcoa as we delivered on strategic actions and operational improvements, including closing the acquisition of Alumina Limited, announcing the sale of our interest in the Ma’aden joint ventures, hitting production records and improving operational stability,” said CEO William Oplinger.
Q4 revenue up 20% year-on-year to US$3.5bn
Full year revenue up 13% to US$11.9bn
Q4 net income up 124% to US$202m
Full year net income of US$60m vs US$651m loss a year ago
Paid quarterly cash dividend of 10 cents per share
2025 Alumina segment production forecast between 9.5-9.6mt, a decrease from 2024 due to curtailment of the Kwinana refinery
2025 Alumina segment shipments forecast between 13.1-13.3mt, consistent with 2024
2025 total Aluminum segment production forecast between 2.3-2.5mt, an increase from 2024 due to smelter restarts
The below topics have been answered by Alcoa President and CEO William Oplinger, CFO Molly Beerman and Senior VP of Treasury Louis Langlois.
Q4 2024 production: “Nine of our 11 smelters increased annual production, with 5 smelters achieving annual production records.”
Q4 2024 earnings and margins: “Revenue was up 20% sequentially to $3.5 billion… Fourth quarter net income attributable to Alcoa was $202 million versus the prior quarter of $90 million, with earnings per common share doubling to $0.76 per share.”
Global demand comments: “In aluminum, global demand remained resilient in the fourth quarter. European and North American demand continues to be supported by the packaging and electrical sectors, while building and construction and automotive remain challenged.” Alumina price performance and outlook: “In alumina, prices reached an all-time high in the fourth quarter as a result of a tight market on lower-than-expected supply… Looking ahead to 2025, in order for the alumina market to come back to balance, several ramp-up and new projects in China, Indonesia, and India must complete as planned.”
Energy cost drivers and factors: “Fourth quarter adjusted EBITDA reflects…lower energy costs, partially offset by increased other costs, primarily related to intersegment eliminations.”
Market supply and demand: “Announced smelter curtailments in Russia, front-loaded maintenance at smelters in China, together with delayed ramp-ups in Indonesia, have tightened global aluminum supply.”
2025 outlook: “For the full year, we expect alumina production to range between 9.5 and 9.7 million tons and shipments to range between 13.1 and 13.3 million tons… The aluminum segment is expected to produce 2.3 to 2.5 million tons… Limited supply growth is expected globally in 2025, following recent curtailments and delayed ramp-ups.”
Efficiency program: “We delivered and exceeded our $645 million profitability improvement program ahead of schedule… In November, we started delevering the company with the repayment of $385 million of debt while maintaining our quarterly dividend.”
What is the impact of potential 25% tariffs on Canada, and how might trade flows and the Midwest premium be affected: "Ultimately, if there's a differential between Canadian and non-Canadian metal, you're going to see trade flows disrupted such that us and other suppliers most likely will shift from Canadian metal into Europe, and you'll see Middle Eastern metal, potentially Indian metal, coming into North America.”
What is Alcoa’s net debt target, and how does it approach capital returns: "We no longer have a stated net debt target. However, we are currently higher than we've been in the last three years. We closed the year at $2.1 billion in adjusted net debt. If you recall back to 2021 and 2022, we were right around $1 billion in adjusted net debt, and that was certainly a more comfortable level for us."
What is the current state of the bauxite and alumina markets, and how might these trends evolve in 2025:
“The bauxite market currently is very tight. We see bauxite pricing in China at $120 per ton, $130 per ton, probably the highest bauxite has ever been. When a coastal refinery in China is looking at restarting, if they're using imported bauxite, their bauxite cost alone is somewhere between $250 per ton and $300 per ton."
“When we look at the alumina market, we think that alumina will remain tight, we believe, through the first half. In order for the alumina market to loosen up, we need to see production coming online in India, Indonesia. But with a tight bauxite market and an expensive bauxite market, that pressures the alumina market further.”
Why is 2025 CapEx guidance higher, and what should we expect for CapEx in subsequent years: "If you think in 2024, we were guiding to about $600 million in expected CapEx, we did underspend that a bit. However, we're thinking of it as going from $600 million up to $700 million and we had been guiding that we would add at least $50 million the next two years related to the mine moves. As it turns out, we're adding $70 million in 2025. I don't yet have the number for 2026 on the mine moves, but you can expect that that will be significant. The mine moves will take three-ish years to complete. So we would be elevated during that time."
Given the high aluminum price, what kind of decisions do you need to make to restart operations in places like Warrick or Lista: "The first and foremost is we need some clarity around the tariff structures before we do anything with the US, Canadian, or European assets ... The metal price may support additional capacity in a place like Lista, especially if we can get European energy prices at a reasonable level."
This article was generated with the support of AI and reviewed by an editor.
Get the latest news and insights direct to your inbox