Alcoa(US:AA)2025-10-28 20:23Financial Performance - Net income attributable to Alcoa Corporation was $232 million in Q3 2025, up from $164 million in Q2 2025, reflecting a favorable change of $68 million[168]. - Year-to-date net income attributable to Alcoa Corporation reached $944 million in the first nine months of 2025, compared to a net loss of $142 million in the same period of 2024, marking a favorable change of $1,086 million[168]. - Sales for Q3 2025 were $2,995 million, a decrease of $23 million from Q2 2025, while year-to-date sales increased by $973 million to $9,382 million compared to $8,409 million in 2024[169]. - The Company reported a favorable change in net income of $963 million, primarily due to higher aluminum and alumina pricing, partially offset by tariffs on U.S. imports of aluminum from Canada[236]. Production and Shipments - Aluminum production for Q3 2025 was 579 kmt, a 1% increase from Q2 2025, and year-to-date production reached 1,715 kmt, up 4% from 1,644 kmt in 2024[219][221]. - Total aluminum shipments in Q3 2025 were 612 kmt, a decrease from 634 kmt in Q2 2025, while year-to-date shipments were 1,855 kmt, down from 1,949 kmt in 2024[219][221]. - Third-party shipments of alumina were 2,205 kmt in Q3 2025, slightly up from 2,195 kmt in Q2 2025, while aluminum shipments were 612 kmt, down from 634 kmt[169]. - In Q3 2025, total alumina shipments were 2,205 kmt, with third-party alumina sales amounting to $841 million, while total sales reached $1.428 billion[199]. Pricing and Costs - Average realized price per metric ton of aluminum increased to $3,374 in Q3 2025 from $3,143 in Q2 2025, contributing to higher sales despite lower shipment volumes[169]. - The average API for alumina was $367 per metric ton, a 3% decrease compared to the prior quarter, but a 9% increase year-over-year[190]. - Adjusted operating costs for alumina produced and shipped were $318 per metric ton in Q3 2025, compared to $323 per metric ton in Q2 2025[199]. - Aluminum prices increased to an average of $2,598 per metric ton in Q3 2025, with a 58% sequential increase in the Midwest premium following tariff adjustments[207]. Debt and Financing - Alcoa's debt repositioning included the issuance of $1,000 million in Senior Notes and the tender of $890 million in existing notes, incurring $12 million in debt settlement expenses[159][160]. - The Company recorded borrowings of $51 million and repurchased $98 million of inventory related to inventory repurchase agreements during the nine-month period of 2025[243]. - In March 2025, the Company completed debt issuances of $500 million aggregate principal amount of 6.125% Senior Notes due 2030 and $500 million aggregate principal amount of 6.375% Senior Notes due 2032, with net proceeds of $985 million[244]. - As of September 30, 2025, the Company was in compliance with all financial covenants under its $1,250 million revolving credit facility[247]. Operational Changes - The Kwinana alumina refinery in Australia was permanently closed, previously operating at approximately 80% of its 2.2 million metric tons capacity before curtailment[146]. - The San Ciprián smelter in Spain was operating at approximately 29% of its 228 kmt capacity as of September 30, 2025, with a full restart expected by mid-2026[153]. - Restructuring and other charges in Q3 2025 amounted to $885 million, significantly higher than $14 million in Q2 2025, reflecting ongoing operational adjustments[177]. - Alcoa recorded restructuring charges of $856 million in Q3 2025, including $430 million for asset retirement obligations and environmental remediation[192]. Tax and Regulatory Matters - The Administrative Review Tribunal of Australia ruled that no additional tax is owed, resulting in a net cash impact of approximately $149 million from refunded tax assets[158]. - The benefit from income taxes in Q3 2025 was ($51 million) on income before taxes of $167 million, resulting in an effective tax rate of (30.5%) compared to a provision of $10 million in Q2 2025[178]. Labor Relations - Alcoa is negotiating a new collective bargaining agreement with the Australian Workers Union for approximately 400 employees at the Portland smelter[163]. - A new four-year collective bargaining agreement was ratified with unions representing approximately 400 employees at the Fjarðaál smelter in Iceland[164].