Alcoa Inc. (AA) posted its second consecutive quarterly loss, $497 million (or 61 cents a share) but saw its stock value rise as analysts cheered the company’s cost-cutting measures. Chief Executive Officer Klaus Kleinfeld said its end markets have shown signs of bottoming or stabilizing, Reuters reported.
In the last week, concerns over slowing Chinese growth have led to a 4.7% decline in Alcoa's stock and speculation has driven losses across the manufacturing industry as one of the largest markets for manufacturing goods is starting to cool. The Shanghai Composite Index fell a little over 4% on the 29th of June alone bringing it to its lowest close in 14 months.
Nearly 2/3's of Alcoa's North American revenue is derived from the auto, paper/packaging, and construction industries. The ability of these industries to contribute to Alcoa's revenue was fueled by unsustainable debt accumulation at both the consumer and corporate level. It may be many years before these three industries recover to pre-recession levels and are able to fuel demand for aluminum products.