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Key takeaways from the call:
Despite the net loss due to lower realized prices for alumina and aluminum, Alcoa remains bullish on the long-term fundamentals of the aluminum market. They are focused on improving productivity, reducing costs, and managing working capital. Additionally, they are working on obtaining mining approvals in Western Australia and are committed to meeting environmental standards.
In the aluminum segment, the company predicted an unfavorable energy impact of $30 million due to CO2 compensation changes in Norway, but expected $35 million in raw material price improvement to offset some of the costs. The company also highlighted a restructuring plan at its Kwinana refinery in Western Australia, aiming to save $10 million annually.
Alcoa’s Chief Financial Officer, William Oplinger, discussed the company’s efforts to improve competitiveness and modernize plants. They mentioned that Kwinana, one of their plants, is undergoing efforts to improve profitability through additional market opportunities and cost reduction measures. Alcoa has also launched a workforce blueprint exercise to streamline labor and reduce costs across their system.
Despite the challenges in the aluminum market, particularly in 2023 and 2024, Alcoa expects a rebound in demand in 2024 due to growth in building and construction and the end of destocking in can sheet. They also believe that the Chinese cap on supply will be maintained at 45 million metric tons.
The company also discussed its strategic initiatives and cash flows. They mentioned that premiums for their EcoLum and EcoSource products range between $10 and $30 per ton. They also stated that their cash balance is currently at $926 million and that they have access to significant liquidity through credit agreements.
Alcoa Corporation (NYSE:AA) concluded the earnings call with optimism for the company’s future success and looks forward to discussing fourth-quarter results in January.
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