Al Root

Alcoa stock was lower after the aluminum maker reported better-than-expected first-quarter earnings.

Things weren't that bad. It's the uncertainty nettling investors.

Wednesday evening, Alcoa reported earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $855 million, and earnings per share of $2.15 on sales of $3.4 billion. Wall Street had estimated Ebitda of $810 million, earnings per share of $1.68, and sales of $3.5 billion, according to FactSet. A year ago, Alcoa lost 81 cents a share on sales of $2.6 billion and Ebitda of $132 million.

Things improved. "A positive aluminum market led to stronger results for the first quarter, while we continued to focus on safety, stability, and operational excellence amidst economic uncertainty," said CEO William Oplinger in a news release.

Earnings easily beat estimates. Still, Alcoa shares were down 2.8% in premarket trading at $24.36, while S&P 500 futures were up 0.6% and Dow Jones Industrial Average futures were down 1%. UnitedHealth Group's weak earnings report hurt Dow futures. Shares were down 19% in premarket trading.

Tariff costs amounted to about $20 million due to imports from Canada, which are taxed at a rate of 25%. That rate became effective on March 12.

Shipment guidance was unchanged. The company still expects 2025 alumina shipments of 13.1 million to 13.3 million metric tons, and aluminum shipments of 2.6 million to 2.8 million metric tons.

Second-quarter Ebitda in the alumina division should be similar to the first quarter at $664 million. Aluminum Ebitda faces $90 million in higher tariff costs offset by lower alumina spending.

Tariffs on Chinese suppliers will also increase costs by $10 million to $15 million annually, Alcoa said.

There was no bottom-line number provided, but guidance appears to compare favorably with Wall Street's projection for second-quarter Ebitda of $404 million.

Benchmark aluminum prices averaged about $2,600 per metric ton in the first quarter. They are down to about $2,400 per metric ton "reflecting the uncertainty of the impact of tariffs on the global economy and aluminum market," said Oplinger on the company's earnings conference call.

Tariffs dominated the conference call, with analysts peppering management with questions about costs and the likelihood of change. Alcoa can't answer all of them. The company knows they mean increased costs and could lead to less business.

"It's a great question that doesn't have a great answer," said Oplinger in response to one question potential trade actions in the EU. "The reason why I say that is there is just too uncertainty still about what the EU will do in relation to the U.S. tariffs for us to speculate at this point."

That sums up what Alcoa is facing. The uncertainty is probably the best reason explaining the stock did after a solid quarter.

Write to Al Root at allen.root@dowjones.com

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April 17, 2025 07:46 ET (11:46 GMT)

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