Key Takeaways:
Alcoa Corp. cut its 2026 alumina production forecast by as much as 300,000 metric tons after a cyclone and bauxite contamination disrupted its Pinjarra refinery in Western Australia, overshadowing a quarter in which higher aluminum prices drove revenue to a record.
"The refinery has since returned to stable operations and is performing well, but we do not expect to fully recover the production and shipment volumes that were lost during the second quarter," Chief Financial Officer Molly Beerman said on an earnings call Thursday.
The Pittsburgh-based company now expects to produce 9.5 million to 9.6 million metric tons of alumina this year, down from a prior range of 9.7 million to 9.9 million tons. Alumina shipments will also be lower by 300,000 to 400,000 metric tons. The disruptions began in late March with instability at Pinjarra — one of Alcoa's largest alumina refineries — that was worsened by gas supply disruptions tied to Cyclone Narelle, the company said.
Adjusted earnings of $2.12 a share missed the $2.25 analyst estimate compiled by FactSet, while revenue of $3.97 billion came in below the $3.99 billion consensus. Net profit rose to $407 million, or $1.53 a share, from $164 million, or 62 cents, a year earlier. Aluminum shipments climbed 18% from the prior quarter, driven by repositioned inventory in North America and increased smelter capacity.
Beerman attributed the earnings miss to a drop in aluminum prices during the final two weeks of June that Alcoa could not fully capture due to its pricing lag structure. "This does not change the underlying strength of the business or the quality of our operational execution," she said.
Alcoa also said between 3 million and 3.5 million metric tons of alumina capacity remains offline in the Strait of Hormuz because of the war in Iran, though prices have stabilized. If the waterway stays closed, executives said, pressure on remaining regional capacity would intensify. Demand in North America and Europe remains strong, while the war has depressed refinery margins in the Middle East.
The results come weeks after Alcoa agreed to acquire South32 Ltd.'s bauxite, alumina and aluminum operations for as much as $5.6 billion, betting that demand for the lightweight metal from power grids, data centers and the energy transition will outpace new supply. The company also reached an agreement with the governments of Australia, Japan and the U.S. to build a gallium production plant in Western Australia.
Shares fell 2.7% to $45.60 in after-hours trading. The guidance cut and earnings miss signal near-term headwinds from operational disruptions, even as Alcoa's long-term bet on aluminum demand growth remains intact. Investors will watch for updates on the South32 deal closing and the Pinjarra refinery's recovery in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
