Alcoa’s profit beat fueled by rising alumina prices, shares rise

Posted by: Admin | Posted on: October 18th, 2018 | 0 Comments

(Reuters) – Top U.S. aluminum producer Alcoa Corp (AA.N) reported a better-than-expected quarterly profit on Wednesday, as a series of supply hits boosted alumina prices.

Shares of the company rose almost 5 percent to $38.49 in after-hours trading, also helped by the announcement of a $200 million share repurchase program.

Alumina prices spiked during the year, largely due to supply disruptions such as lower production at Norsk Hydro’s (NHY.OL) Alunorte, the world’s largest alumina refinery, a strike at Alcoa’s Australian operations and U.S. sanctions on Russian aluminum giant Rusal (0486.HK).

Chief Executive Roy Harvey said on a post-earnings call with analysts that while increased alumina prices represented an added cost, the company benefited from strength in third-party alumina sales.

Third-party alumina sales, or supplies to other smelters, surged 54.4 percent to $1.10 billion in the third quarter, the company said.

Alcoa said it had a net benefit of $27 million in the third quarter from U.S. tariffs as they helped push up the Midwest regional premium.

President Donald Trump in March imposed tariffs on imported aluminum aimed at boosting domestic aluminum makers against the backdrop of overcapacity in China.

The tariffs, which came into force in June, also extended to products from allies such as the European Union and Canada.

Alcoa in August asked the U.S. Commerce Department to exempt from tariffs its purchases of 40,000 metric tons of aluminum from Canada, and is awaiting the government’s response.

Excluding certain items, Alcoa earned 63 cents per share, easily topping expectation of 36 cents, according to I/B/E/S data from Refinitiv.

Peter Ward, an analyst at Renaissance Macro Research, said the quarter was “okay” given the competitive challenges in the market. “The Street had recently cut estimates way too much.”

The company tightened its 2018 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) forecast to range between $3.1 billion and $3.2 billion, raising its midpoint slightly, compared with its previous expectation of $3.0 billion and $3.2 billion.

Net loss attributable to Alcoa was $41 million, or 22 cents per share, in the third quarter ended Sept. 30, compared with a profit of $113 million, or 60 cents per share, a year earlier.

The results include a charge of $160 million mainly from the transfer of certain of the company’s U.S. pension and retirement benefits.

Revenue rose 14.4 percent to $3.39 billion, topping analysts’ average estimate of $3.31 billion.

Reporting by Sanjana Shivdas in Bengaluru; Additional reporting by Vibhuti Sharma in Bengaluru; Editing by Sriraj Kalluvila

At Facebook, public funds join push to remove Zuckerberg as chairman

Posted by: Admin | Posted on: October 18th, 2018 | 0 Comments

(Reuters) – Four major U.S. public funds that hold shares in Facebook Inc on Wednesday proposed removing Chief Executive Officer Mark Zuckerberg as chairman following several high-profile scandals and said they hoped to gain backing from larger asset managers.

State treasurers from Illinois, Rhode Island and Pennsylvania, and New York City Comptroller Scott Stringer, co-filed the proposal. They oversee money including pension funds and joined activist and original filer Trillium Asset Management.

A similar shareholder proposal seeking an independent chair was defeated in 2017 at Facebook, where Zuckerberg’s majority control makes outsider resolutions effectively symbolic.

Rhode Island State Treasurer Seth Magaziner said that the latest proposal was still worth filing as a way of drawing attention to Facebook’s problems and how to solve them.

“This will allow us to force a conversation at the annual meeting, and from now until then in the court of public opinion,” Magaziner said in a telephone interview.

A Facebook spokeswoman declined to comment.

At least three of the four public funds supported the 2017 resolution as well. The current proposal, meant for Facebook’s annual shareholder meeting in May 2019, asks the board to create an independent board chair to improve oversight, a common practice at other companies.

It cites controversies that have hurt the reputation of the world’s largest social media network, including the unauthorized sharing of user information, the proliferation of fake news, and foreign meddling in U.S. elections.

Illinois State Treasurer Michael Frerichs said in an interview that, while an independent chair might not have prevented all the issues, “there might have been fewer of these problems and less of a drop in share price” at the company.

Shares of Facebook have had a rocky year, under pressure from revelations about the privacy and operational issues as well as concerns over slowing revenue growth. They closed Wednesday at $159.42, 10 percent lower than at the start of the year and well off a closing high of $217.50 reached on July 25.

The 2017 resolution received the support of a slim majority of outside investors, according to the public fund leaders’ calculations. Magaziner and Frerichs said they planned to talk with larger Facebook investors in coming months to seek their support.

Among funds that are Facebook’s largest investors, the Vanguard Total Stock Market Index Fund and Fidelity Contrafund voted against the 2017 proposal, securities filings show, while the American Funds Growth Fund of America supported it.

American Funds representatives did not reply to requests for comment on Wednesday. Spokespeople for Fidelity and Vanguard declined to comment. Contrafund manager Will Danoff was supportive of Facebook’s response to problems in an investor note in August.

In opposing the 2017 proposal, Facebook said an independent chair could “cause uncertainty, confusion, and inefficiency in board and management function and relations.”

Zuckerberg has about 60 percent voting rights, according to a company filing in April.

The New York City Pension Funds owned about 4.5 million Facebook shares as of July 31, while Trillium held 53,000 shares.

The Pennsylvania Treasury held 38,737 shares and the Illinois Treasury owned 190,712 shares as of August. Rhode Island funds hold 168,230 Facebook shares, a spokesman said.

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Reporting by Arjun Panchadar and Munsif Vengattil in Bengaluru and Ross Kerber; Editing by Sriraj Kalluvila and Rosalba O’Brien