Alcoa’s Investor Day: What Investors Should Know


Nov. 11 2015, Updated 11:25 a.m. ET

Alcoa to split into 2 companies

Alcoa (AA), a company that was once synonymous with aluminum, is going through the biggest transition in its history. It has announced it will be splitting into two separate companies. One company will retain the Alcoa name and the legacy aluminum business. The other company, which is yet to be named, will house Alcoa’s value-add business.

To learn more about this split, you can read Will Alcoa’s Splitting into 2 Companies Create Shareholder Value? It’s worth noting that earlier this year, BHP Billiton (BHP) spun off its non-core assets into a new entity called South32 (SOUHY).

Currently, Alcoa forms 0.76% of the Guggenheim Multi-Asset Income ETF (CVY).

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Series overview

In this series, we’ll look at the key takeaways from Alcoa’s Investor Day held on November 4, 2015. During the event, Alcoa’s management shared their thoughts on the outlook for the aluminum industry. The industry is going through the worst time since the global financial crisis of 2008–2009. After briefly trading above $1,500 per metric ton, spot aluminum has again gone below the psychologically crucial mark. The graph above shows the recent movement in spot aluminum prices.

Aluminum looks weak

Aluminum looks the weakest in the base metals space. Responding to lower aluminum prices, companies such as Alcoa and Century Aluminum (CENX) have cut smelting capacity to restore supply balance in the markets. At its Investor Day, Alcoa gave its guidance on the projected aluminum surplus in 2016. We’ll look at that in the course of this series.

Alcoa also provided updates on the split that’s expected to be completed in the second half of 2016. In the next part, we’ll explore what Alcoa’s management had to say about the split.


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