Alcoa’s key customers
As discussed earlier, Alcoa gets more than half of its revenues from value-added products. These products are used by various end industries. The aerospace industry is Alcoa’s biggest customer. It accounts for almost one third of its value-added sales. Packaging is the second biggest customer. It accounts for almost a quarter of Alcoa’s sales. Industrial products are the third largest customer.
The importance of the aerospace industry
As discussed earlier, the aerospace industry accounts for almost one third of Alcoa’s revenues. This makes aerospace a key segment for the company. It’s important to note that while the aluminum industry is plagued with massive inventory, there’s a nine-year production backlog for the large commercial aircraft segment. The chart above shows the various aircraft components that Alcoa produces. There are parts that Alcoa already produces. However, Alcoa is also developing some components for the future.
Alcoa is a global leader in the aerospace industry
Alcoa is a global leader in aerospace fastening systems and jet engine airfoils. It develops airframe and engine applications. Alcoa has developed more than 90% of all aluminum aerospace alloys. It’s a leader in the aerospace industry. Every western commercial aircraft that’s flying today uses Alcoa fasteners.
The aerospace industry is one of the biggest aluminum product consumers worldwide. It’s a key segment for aluminum companies like Alcoa (AA), Century Aluminum (CENX), Kaiser Aluminum Corp. (KALU), and Constellium (CSTM). These companies form the investment universe for the SPDR S&P metals and mining ETF (XME).
In the next part of the series, we’ll discuss Alcoa’s recent move to boost its market share in the aerospace industry. We’ll discuss how the move will impact Alcoa’s investors.