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Alcoa's Q1 profit falls by US$179M YOY as low commodity prices, forex continue to bite

U.S.-based aluminum major Alcoa Inc. was able to book a net profit in the first quarter,but it was lower by US$179 million compared to the same period a year ago.

Net income during the quarter amounted to US$16 million, comparedto the first quarter of 2015 when net income totaled US$195 million, or 14 centsper share, according to the April 11 results.

Revenue slid 15% year over year to US$4.95 billion largely asa result of continued low alumina and aluminum prices, foreign exchange impactsand divested, curtailed or closed operations.

First-quarter net income was also impacted by US$92 million worthof special items including restructure-related costs of US$63 million, of whichabout 75% was noncash.

Alcoa remains on track to complete its business split in the second half of this year.

Following the separation, the new Alcoa will become the upstreambusiness, comprising the five business units that currently make up global primaryproducts — bauxite, alumina, aluminum, cast products and energy.

In the first quarter of this year, these combined businessesreported revenue of US$2.1 billion, after-tax operating income of US$22 millionand adjusted EBITDA of US$185 million.

The new Alcoa segments generated US$175 million in productivitygains in the first quarter as part of its business improvement program, and areon track to deliver US$550 million in productivity savings for the year.

Meanwhile, Alcoa predicts a roughly 1.1 million-tonne globalaluminum deficit on 5% demand growth and 2% supply growth, as well as a global aluminadeficit of 1.4 million tonnes this year.