Alcoa Corp.
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Facing “Fuzzy” Outlook, Nucor and Alcoa Execs Keep Eye on Big Picture

Oct. 20, 2022
Shipments slid for both companies in Q3 as some customers held off on orders.

Reflecting a slowing economy, executives of metals makers Nucor Corp. and Alcoa Corp. reported third-quarter results that missed estimates due to slipping demand and lower prices. But both leadership teams also told analysts they’re confident in the mid-term prospects for their businesses because of broader investment tailwinds.

The leaders of Charlotte-based Nucor said the company finished the three months ended Sept. 30 with net income of $1.7 billion, down from $2.1 billion in the same period of 2021, as sales ticked up slightly to $10.5 billion but energy costs climbed 16%. Overall shipments fell 10% to 5,869 tons with the company’s two largest segments, sheet and bars, seeing volumes slip 4% and 8%, respectively.

At Pittsburgh-headquartered Alcoa, Q3 produced a net loss of $746 million that included $626 million in charges related to pension settlements. The company’s adjusted EBITDA fell 77% to $210 million due to both falling aluminum and alumina prices and higher input costs. Third-party aluminum shipments fell 14% year over year while alumina shipments were down more than 7%.

“We have worked diligently over these past several years to build increased resilience in our business so we can compete through all phases of the commodity cycle, including the one we are experiencing now,” Alcoa President and CEO Roy Harvey said in a statement.

Coming off their third quarter, Harvey and CFO Bill Oplinger have reduced their full-year forecasts for alumina and bauxite shipments by about 4% and 2%, respectively. Harvey told analysts on a conference call that his team is “bringing a renewed focus on system-wide performance, including our people, processes and equipment” as it tries to balance demand drops in some product categories with continued strength in others.

Nucor Chair, President and CEO Leon Topalian said his team faces “an outlook that’s a little bit fuzzy” and expects Q4 profits from its steel mills to fall substantially. Some of Nucor’s customers are holding off on orders and it’s also planning some maintenance outages but Topalian said the company remains on pace to set a record for annual profits.

Still, both executive teams expressed confidence that demand for their products will hold up nicely over the economic cycle, pointing to tailwinds from the automotive sector—electric vehicles contain 40% more aluminum that internal combustion cars, Harvey pointed out—as well as a range of infrastructure investments in the energy sector as well as new manufacturing and logistics facilities under the broad umbrella of reshoring. The latter, Nucor executives said, is helping their recently acquired businesses—including garage and overhead door manufacturer C.H.I.—perform better than they had modeled.

Investors seemed to buy into the idea of long-term opportunity. After initially falling on the heels of its earnings report, shares of Alcoa (Ticker: AA) were up about 4% to $39.15 in late trading Oct. 20. (They are, however, still down about 50% over the past six months.) Nucor shares (Ticker: NUE) were up nearly 3% to $125, having similarly reversed morning losses. They are down about 25% since April.

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