Alcoa (AA): Q3 profit more than doubles on high aluminium prices, but falls short of last quarter's adjusted earnings as it prepares a $3.1bn asset purchase

Alcoa, the US aluminium producer, reported third-quarter net income of $483m, up from $232m a year earlier, on sales of $3.70bn. Compared with the second quarter, sales and adjusted profit were lower because the aluminium price it received fell. The company also confirmed funding for a roughly $3.1bn cash purchase of South32's bauxite, alumina and aluminium assets, expected to close in the first half of 2027.

What happened

On Thursday 15 October 2026, Alcoa Corporation (NYSE: AA) published its results for the three months to 30 September 2026 in a press release filed with the SEC, the US market regulator. Alcoa digs bauxite (the ore), refines it into alumina (a white powder), and smelts alumina into aluminium metal. Sales were $3,704m and net income attributable to Alcoa was $483m, or $1.81 per diluted share. The company said it completed the restart of its Alumar smelter in Brazil, and that aluminium production rose for a sixth quarter in a row, to 649 thousand metric tons (kmt). It also said South32 shareholders approved on 15 October the sale of South32's interests in its bauxite, alumina and aluminium assets to Alcoa, called AliGroup in the filing, for about $3.1bn in cash. Alcoa funded this in September with $1.5bn of 6.625% notes due 2034 and $1.1bn of 6.875% notes due 2036, and expects to close in the first half of 2027, subject to regulatory approvals.

The numbers, explained

Net income is the profit left after all costs and taxes. At $483m it was 108% higher than the $232m of the third quarter of 2025 (483 divided by 232 is 2.08) and 18.7% above the $407m of the second quarter. Sales of $3,704m were 23.7% above a year ago (from $2,995m) but 6.6% below the second quarter's $3,966m, which the company rounds to 7%. The main driver is the price of aluminium: the average price Alcoa realised was $4,527 per metric ton, 34.2% above the $3,374 of a year ago but 4.7% below the $4,752 of the second quarter. Shipments of aluminium were 693 kmt, up 13.2% on a year ago (from 612) but down 4.5% on the second quarter (from 726). Together, a lower price and fewer tons sold explain the quarterly dip in sales.

The headline profit is GAAP, meaning it follows the official US accounting rules. Alcoa also reports adjusted figures, which strip out one-off items the company chooses to exclude. Adjusted net income was $485m, or $1.82 per share, so the one-offs netted to only $2m this quarter (gains on energy contracts and on Alcoa's holding in Saudi miner Ma'aden were offset by cleanup costs and deal costs). Adjusted EPS of $1.82 was below the $2.12 of the second quarter, a fall of 14.2%, but far above the loss of $0.02 a year ago. Adjusted EBITDA, a measure of operating profit before interest, tax and depreciation, was $789m, down 12.4% from $901m last quarter but 2.9 times the $270m of a year ago. As a share of sales it was 21.3% (789 divided by 3,704), against 9.0% a year ago (270 divided by 2,995). Free cash flow, the cash from operations after equipment spending, was $472m: $643m less $171m.

Why it matters

Alcoa earns most of its money from the gap between what it receives for aluminium, which is set largely by world market prices, and what it costs to make it, mainly electricity, alumina and other raw materials. That is why profit moved so sharply while shipments changed only modestly. The Aluminum segment, which is the smelting business, earned adjusted EBITDA of $862m, down 19.7% from $1,073m in the second quarter but 2.8 times the $307m of a year ago. The Alumina segment, the refineries that also sell to outside customers, roughly broke even at minus $1m, compared with minus $96m last quarter and plus $67m a year ago. Aluminium goes into cars, packaging, buildings and power cables, so customers in those industries are exposed to the same price swings. For rivals, the figures show how much a few hundred dollars per ton changes earnings across the whole sector.

The South32 purchase is the bigger structural change. Cash at 30 September was $4,408m against $1,597m at the end of 2025, but $2.6bn of that is the borrowing raised for the purchase (4,408 minus 2,600 leaves about $1.8bn). Long-term debt was $4,821m. Alcoa also said its annual interest bill should be about $185m, up from its earlier projection because of the new notes, and that it expects extra interest income on the cash it holds before the deal closes. Reported fact: the notes are issued and the shareholder vote is done. Company forecast: the first-half-2027 close. We offer no view on how the purchase will perform, because the assets are not yet Alcoa's.

What to watch next

Alcoa's outlook for the fourth quarter, which is the company's own forecast and not a result, says production and shipments should rise in both segments. It expects Aluminum segment adjusted EBITDA to be about $30m lower because of higher raw-material costs and planned maintenance, and a further $30m lower because of higher alumina costs. Alumina segment earnings are expected to be similar to the third quarter. It reaffirmed its 2026 targets of 2.4 to 2.6 million tons of aluminium production and 9.5 to 9.6 million tons of alumina, expects operational tax expense of $65m to $75m in the fourth quarter, and has agreements to sell parts of its Massena East site in New York, with $50m to $65m due at closing, which it expects within six months. Regulatory approvals for the South32 deal remain outstanding, with closing guided for the first half of 2027. Alcoa has not yet published a date for its fourth-quarter results in the documents we read.

Sources

• Alcoa Corp Form 8-K Exhibit 99.1, Third Quarter 2026 Results, 15 October 2026 (SEC)
• Alcoa Corp Form 8-K, 15 October 2026 (SEC)
• Motley Fool Australia: Alcoa posts higher net income, sets sights on AliGroup completion
• 247WallSt: Alcoa Q3 2026, EPS beats by 22%, free cash flow surges to $472M
• Yahoo Finance: Alcoa Corporation Reports Third Quarter 2026 Results