Alcoa(US:AA) HUAXI Securities·2025-04-19 13:23Investment Rating - The industry rating is "Recommended" [5] Core Insights - The report highlights a significant increase in net profit for the company, with a 171.28% quarter-on-quarter growth to $548 million in Q1 2025, compared to a loss of $252 million in the same period last year [10][11] - The report indicates that the increase in aluminum prices and a decrease in alumina prices contributed to the net gains, despite challenges such as reduced shipment volumes and import aluminum tariff costs [11] - The company expects stable production and shipment levels for alumina and aluminum in 2025, with specific forecasts for Q2 indicating potential impacts from tariffs and operational costs [17][18] Production and Operational Performance - In Q1 2025, bauxite production was 9.5 million tons, a decrease of 5.94% year-on-year and 2.15% quarter-on-quarter [1] - Alumina production was 2.355 million tons, down 11.8% year-on-year and 1.46% quarter-on-quarter, while third-party alumina shipments were 2.105 million tons, reflecting a 12.2% year-on-year decrease [1][7] - The average realized price for third-party alumina was $575 per ton, up 54.57% year-on-year but down 9.59% quarter-on-quarter [2] Financial Performance - The total revenue from third-party businesses in Q1 2025 was $3.369 billion, a decrease of 3.63% quarter-on-quarter but an increase of 29.63% year-on-year [9] - The adjusted operating cost for alumina was $312 per ton, reflecting a 0.6% year-on-year increase and a 2.63% quarter-on-quarter increase [2][6] - The adjusted EBITDA for the alumina segment was $664 million, a significant year-on-year increase of 377.7% but a quarter-on-quarter decrease of 7.26% [7] Strategic Actions - The company is actively engaging with government entities to discuss the impact of tariffs on trade flows and the importance of a vertically integrated aluminum supply chain to the U.S. economy [13] - A debt restructuring initiative was completed, involving the issuance of $500 million in senior notes due in 2030 and 2032, with net proceeds of $985 million primarily used for refinancing existing debt [14][15] - A joint venture was established to support the ongoing operations of the San Ciprián plant, with the company holding a 75% stake [16] Outlook for 2025 - The company anticipates alumina production and shipment levels to remain stable, with total production expected between 9.5 million to 9.7 million tons and shipments between 13.1 million to 13.3 million tons [17] - For Q2 2025, the aluminum business is projected to face a $90 million quarter-on-quarter adverse impact due to tariffs on imports from Canada [17]