NEW YORK (AP) — Shares of Alcoa Inc. tumbled before Friday's opening bell after the aluminum company reported a $2.34 billion loss for its most recent quarter, hurt by low aluminum prices.
The company's adjusted profit fell short of Wall Street expectations, while its revenue decline wasn't as bad as expected.
Alcoa is struggling with a worldwide glut of aluminum that has cut into prices. For its fourth quarter, the company received an average price that was 7 percent lower than it got a year earlier. The company has idled one-sixth of its smelting capacity and could make more cuts.
Meanwhile, it's more optimistic about its prospects for segments that sell rolled aluminum and engineered products, which accounted for 57 percent of company revenue in 2013. Alcoa expects that demand will continue to rise for aluminum products in airplanes, autos and commercial construction.
The company expects overall aluminum demand to grow 7 percent this year, the same as in 2013.
Citi's Brian Yu backed his "Neutral" rating and $9 price target for Alcoa stock, though he noted that the company's shares could trade back below the $10 mark for a while as investors adjust their expectations.
But he noted that despite a tough pricing environment, Alcoa has managed to generate positive free cash flow every year since 2008, which provides some comfort for long-term investors hanging around for a rebound in prices.
In premarket trading, Alcoa shares fell 65 cents, or 6.1 percent, to $9.97 about 90 minutes ahead of the market open.
Shares of Alcoa Inc. tumbled before Friday's opening bell after the aluminum company reported a $2.34 billion loss for its most recent quarter, hurt by low aluminum prices.