(AA) Alcoa Adopts Natural Reforestation Program

Aluminum giant  Alcoa Inc. (AA) announced that the company is using a very cost effective and natural way of reforestation at its Juruti bauxite mine in Brazil. The method is based on the theory of nucleation, where reforestation is done using small dense nuclei of plants and animals, which facilitate the arrival of other species.

At the Juruti mine, a modern nucleation method is applied, where birds and other elements of nature help recover the soil rather than the conventional method of reforestation. The nucleation method uses lesser number of machinery leading to lesser usage of diesel oil and low emissions.

The mine is pursuing a natural process, where artificial shelters are provided for animals and conditions are such that there is a natural regeneration of species, which attracts animals and creates a food chain in the restoration process. The process is quite eco friendly and saves costs. The Juruti mine is amongst the first places in Brazil to use the nucleation method to conserve the environment.

Alcoa released its first-quarter 2012 results in April. The company reported earnings of 9 cents per share in the quarter in contrast to a loss of 18 cents in the fourth quarter of 2011. However, it came below the earnings of 27 cents a share recorded in the first quarter of 2011.  

Excluding restructuring charges and other items, Alcoa's profit came in at 10 cents per share, beating the Zacks Consensus Estimate of a loss of 4 cents per share. Higher production and volumes as well as improved market conditions drove Alcoa’s results.

Quarterly revenues inched up 0.3% sequentially to $6,006 million and edged up 0.8% over the prior-year quarter, surpassing the Zacks Consensus Estimate of $5,735 million. The increase in revenues was driven by strong results in Global Rolled Products and Engineered Products and Solutions.

For 2012, Alcoa expects global aerospace market to grow by 3 percentage points on a year-over-year basis to 13% to 14%. The company also expects global growth for the automotive sector to be in the range of 3%-7%, commercial transportation in the range of 1%-5%, packaging in the range of 2%-3%, building and construction in the range of 2.5%-3.5%, and industrial gas turbine in the band of 1%-2%.

The company believes that there will be a deficit in global aluminum supply in 2012. Besides, Alcoa reiterated its expectation that aluminum demand will grow by 7% globally in the year.

Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. It competes with Aluminum Corporation Of China Limited (ACH) and RioTinto plc. (RIO).

Currently, the stock maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating. We have a long-term “Neutral” recommendation on the shares of the company.

ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis Report
RIO TINTO-ADR (RIO): Free Stock Analysis Report

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