What to Watch for in Alcoa’s Second-Quarter Earnings Call

Second-quarter earnings call

Previously in this series, we learned what analysts expect for Alcoa’s (AA) second-quarter earnings. In this article, we’ll look at key updates the markets might be watching for in Alcoa’s second-quarter earnings call.

What to Watch for in Alcoa’s Second-Quarter Earnings Call

2018 guidance

During its first-quarter earnings call, Alcoa said that it expects to post adjusted EBITDA of $3.5 billion–$3.7 billion this year. Alcoa baked aluminum prices of $2,300 per metric ton and an API (alumina price index) of $500 per metric ton into its 2018 guidance. Currently, both alumina and aluminum prices are below the price levels Alcoa assumed in its 2018 guidance. During Alcoa’s second-quarter earnings call, markets could see the company update its 2018 guidance given the recent slide in aluminum prices.

It will also be interesting to see Alcoa’s views on commodity markets—especially the increase in the alumina to aluminum ratio. The partial curtailment of Norsk Hydro’s (NHYDY) Alunorte refinery has led to a spike in alumina prices, and alumina as a percentage of aluminum has risen above its historical average. A section of the market feels that the current ratio might not be sustainable.

Plant restarts

In May, Alcoa announced the temporary shutdown of a potline at its Warrick smelter. During the company’s second-quarter earnings call, markets could be looking for updates on the plant. Furthermore, markets could be looking for any updates on Alcoa’s ABI (Aluminerie de Bécancour) smelter in Canada, which saw labor action earlier this year. Rio Tinto (RIO) is Alcoa’s partner in the plant.

In the next and final article, we’ll see how analysts view Alcoa ahead of its second-quarter earnings release.