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Alcoa's Q2 income slides as metals prices, production cutbacks bite

AlcoaInc.'s second-quarter net income and revenue has taken a hitlargely because of lower metals prices and the impact of production cutbacksand asset sell-offs and closures.

The New York-based aluminum heavyweight said July 11 thatits net income for the quarter dipped to US$135 million, or 9 cents per share,from US$140 million, or 10 cents per share, in the second quarter of 2015.

Revenue tumbled 10% year over year to US$5.3 billion, withfalling aluminum and alumina prices, curtailments, divestments and closuresmore than offsetting any increase from recent acquisitions and organic growth.

While Alcoa as a whole witnessed a lower profit result forthe second quarter, the two businesses that will result from the saw their profitsstrengthen, according to Alcoa.

The value-add business, to be known as Arconic, bookedrevenue of US$3.5 billion, marking a 1% increase on the same quarter of 2015largely due to a 5% increase related to acquisitions but only a 4% decrease inmetals prices.

After-tax operating income for the business was up 3% toUS$294 million compared to a year earlier.

Meanwhile, the upstream business, which will operate underthe name Alcoa Corp., reported a 7% increase in second-quarter revenue toUS$2.3 billion compared to the prior quarter mainly due to 22% higher aluminaprices and 2% higher aluminum prices.

After-tax operating income for Alcoa Corp. climbed to US$150million quarter over quarter on improved pricing, productivity savings andhigher profits reported by the Alumina and Primary Metals segments.

Alcoa reported US$375 million in productivity gains acrossall of its segments and expects to add US$1.2 billion to its coffers this yearfrom the sale of nonessential assets, with US$815 million received so far.