Alcoa (AA): Profit more than doubles to $483m as aluminium prices jump
Alcoa, the US producer of aluminium and the alumina it is made from, reported third-quarter profit of $483m, up from $232m a year earlier, on sales of $3.70bn. The average price it received for aluminium was 34% higher than a year ago, but 4.7% lower than in the second quarter, so profit excluding one-off items fell from the previous quarter.
What happened
On Thursday 15 October 2026, Alcoa published results for the third quarter, the three months to 30 September. Revenue, the company's sales, was $3,704 million, against $2,995 million a year earlier and $3,966 million in the second quarter. Net income attributable to Alcoa shareholders, the profit under US accounting rules (GAAP), was $483 million, or $1.81 per share, compared with $232 million, or $0.88, a year ago. Excluding one-off items, which the company calls special items, profit was $485 million, or $1.82 per share.
The same day, shareholders of South32, an Australian mining company, approved the sale of its bauxite, alumina and aluminium interests to Alcoa. Bauxite is the ore that alumina, a white powder, is refined from; alumina is then smelted into aluminium metal. Alcoa calls the package "AliGroup". It will pay about $3.1 billion in cash and expects the deal to close in the first half of 2027. In September it sold $2.6 billion of bonds to help pay for it.
The numbers, explained
Our working on the headline figures, all from Alcoa's release. Sales rose $709 million from $2,995 million to $3,704 million, which is 23.7% higher than a year ago, and fell $262 million, or 6.6%, from the second quarter. GAAP profit more than doubled: $483 million is 2.08 times $232 million. Adjusted profit, which removes special items such as gains and losses from changing market values of energy contracts and of Alcoa's shares in Saudi miner Ma'aden (net special items were $2 million), was $485 million, down $77 million or 13.7% from $562 million in the second quarter.
Adjusted EBITDA excluding special items, which is operating profit before interest, tax, depreciation and amortisation, was $789 million. That is 2.9 times the $270 million of a year ago ($789M divided by $270M) but $112 million, or 12.4%, below the $901 million of the second quarter. It equals 21.3% of sales ($789M divided by $3,704M), against 9.0% a year ago ($270M divided by $2,995M). The aluminium segment earned $862 million of this, against $307 million a year ago and $1,073 million last quarter.
What drove it: the average price Alcoa realised for aluminium was $4,527 a tonne, against $3,374 a year ago (up $1,153, or 34.2%) and $4,752 in the second quarter (down $225, or 4.7%). Costs rose too: the adjusted operating cost per tonne of aluminium shipped was $2,584, against $2,441 a year ago (up 5.9%). The gap between price and that cost was therefore about $1,943 a tonne ($4,527 less $2,584), against about $933 a year ago ($3,374 less $2,441). This gap is our own simple illustration and leaves out other costs.
Why it matters
Alcoa makes money in two linked steps. It mines bauxite and refines it into alumina, selling some and using the rest itself, and it smelts alumina into aluminium using large amounts of electricity. Its profit therefore depends heavily on the market price of aluminium and alumina, which it does not control, against the cost of power, raw materials and labour, which it partly does. This quarter shows that sensitivity: prices were far above last year, so profit and cash flow recovered strongly, yet a 4.7% dip in price from the second quarter was enough to cut adjusted profit by about 14%.
For customers, aluminium goes into drinks cans and packaging, electrical cables, cars and buildings. On the company's earnings call, finance chief Molly Beerman said global aluminium stocks were historically low at about 42 days of consumption, and that the order book was strong; those are management statements, not independently checked figures. For the sector, the AliGroup deal would give Alcoa more of its own bauxite and alumina supply. Beerman said pro forma leverage (debt relative to earnings) would be roughly 1.5 times and that paying down debt would come before share buybacks. The new bonds cost interest: $1.5bn at 6.625% plus $1.1bn at 6.875% is about $175 million a year on our arithmetic ($99.4M plus $75.6M), and Alcoa now expects about $185 million of interest expense for 2026.
What to watch next
Alcoa's own forecast, not ours, is for higher production and shipments in both segments in the fourth quarter. It expects alumina segment adjusted EBITDA to be similar to the third quarter, and about $30 million of extra cost in the aluminium segment from raw materials and planned maintenance, plus about $30 million more from alumina costs. It reaffirmed its 2026 targets: alumina production of 9.5 to 9.6 million tonnes and aluminium production of 2.4 to 2.6 million tonnes.
Dated events: the AliGroup acquisition is expected to close in the first half of 2027, subject to regulatory approvals. Analyst expectations, as reported by one outlet, were adjusted profit of $1.49 per share and sales of $3.76 billion; Alcoa's $1.82 and $3.70 billion were above and about 1.5% below those. We did not find a dated fourth-quarter results announcement, so check Alcoa's investor website.
- Key terms in plain words
- Alumina: a white powder refined from bauxite ore, which is smelted into aluminium metal.
- Adjusted (non-GAAP) profit: profit with unusual items such as market-value gains and losses removed.
- Adjusted EBITDA: operating profit before interest, tax, and the wear-and-tear charges depreciation and amortisation.
- Free cash flow: cash from operations less spending on equipment and buildings.
Sources
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