ALCOA as PROXY?

Alcoa warns on 3Q earningsTop aluminum producer says earnings could be 39% below estimates on higher energy costs.
September 22, 2005: 5:21 PM EDT

NEW YORK (Reuters) - Alcoa, the world's largest aluminum producer, warned Thursday that its third-quarter earnings would be as much as 39 percent below Wall Street estimates on lower aluminum prices and higher energy and raw-material costs.
Alcoa (down $0.18 to $25.90, Research) shares were halted in after-hours trading Thursday after closing down 18 cents at $25.90 on the New York Stock Exchange. The stock sank more than 5 percent once after-hours electronic trading was resumed.
Alcoa also cited weakness in automotive markets and in Europe in its new forecast for earnings per share from continuing operations of 27 cents to 31 cents. Analysts polled by Reuters Estimates had expected earnings per share of 44 cents on average.
"All these companies are getting hit by (natural) gas. The problem is we know what they are getting hit by but it's impossible to put a number on because you don't know what their hedges are," said analyst Charles Bradford of Bradford Research/Soleil Securities.
Natural gas futures have climbed about 86 percent during the third quarter, driven in part by production cuts due to Hurricane Katrina and the soon-to-strike Hurricane Rita.
"I know the numbers are going to be bad for all of these guys," Bradford said, referring to competitors in the aluminum business as well as steel companies, all of whom carry significant energy costs.
Alcoa said aluminum prices on the London Metal Exchange fell during the quarter, and said recent strength in metal prices will not be reflected until the fourth quarter.
Alcoa also said it did not yet know what the impact would be from the closure of an alumina refinery in Texas and an anode plant in Louisiana due to Hurricane Rita. Any impact, Alcoa said, would be reflected in third-quarter results.
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The economy was losing steam before Katrina. Click here for more. (as I suggested)

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