Alumina shares rise on partner result
Market watch top headlines
Shares in Australian company Alumina have risen after aluminium giant and joint venture partner Alcoa beat sales expectations and forecast a rise in demand in 2013.
Alcoa kicked off the US earnings season posting net income of $US242 million ($A231.5 million), compared to a $US193 million ($A184.63 million) net loss from the same period a year ago.
Excluding one-time gains such as the sale of a hydroelectric project, the amount was only $US64 million ($A61.22 million).
Melbourne-based Alumina's only earning asset is its 40 per cent stake in Alcoa World Alumina and Chemicals (AWAC), with Alcoa holding the controlling remaining 60 per cent.
That includes aluminium smelters at Portland and the struggling Point Henry plant in Victoria.
Shares in Alumina, which is among Australia's top 100 companies by market capitalisation, were 4.75 cents, or 4.85 per cent, stronger at $1.028 at 1300 AEDT.
Alcoa's sales of $US5.9 billion ($A5.64 billion) were higher than the $US5.58 billion ($A5.34 billion) analysts predicted.
However its full year net income slumped to $US191 million ($A182.71 million) from $US611 million ($A584.49 million), driven by a 12 per cent slump in the long struggling price of aluminium to $US1,982 ($A1,896.02) a tonne.
China's over-production of aluminium have driven down prices that were above $US3,000 ($A2,869.85) a tonne before the global financial crisis.
Weaknesses in the global economy in 2012 have hurt demand for aluminium used in products such as aircraft, cars, drink cans, the construction industry and other appliances.
Prices for alumina (aluminium oxide) and aluminium have improved in the last two months and Alcoa forecast demand growing by seven per cent for aluminum this year from six per cent in 2012.
It also sees global aluminium demand doubling between 2010 and 2020.
Alumina's chief executive John Bevan said the fourth quarter result reflected continued challenging industry conditions and the ongoing strength in the Australian dollar.
Alcoa says despite recent price gains in November and December the outlook for pricing remained uncertain in the near term.
Alumina received fully franked dividends of $US20 million ($A19.13 million) from AWAC for the quarter, after receiving no dividends in the previous quarter and $US95 million ($A90.88 million) for the full year.
Mr Bevan says Alumina will receives dividends of at least $100 million in 2013.
It also refinanced a $US107 million ($A102.36 million) in debt that was due in November this year, to December, 2017 with analysts having raised worries about a 44 per cent jump in net debt to $US602 million ($A575.88 million) in 2012.