Aluminum giant, Alcoa Inc. (AA - Analyst Report) announced that it has formed a close-loop program with The Boeing Company (BA - Analyst Report) to considerably increase the recycling of internal aluminum aerospace alloys. The aerospace alloys are used during the production of Boeing airplanes.
The move will recycle aerospace-grade aluminum alloys in Boeing’s plane production process, as well as eventually cut down on the aluminum scrap generated by their suppliers. The close loop recycling program will involve inter-modal transport of aluminum alloy scrap material from Boeing facilities in Auburn, WASH and Wichita, KS as well as third-party processors in Auburn to Alcoa’s Lafayette, IND. facility for melting and recycling into new aerospace materials.
The close-loop program will be recycling 2XXX and 7XXX-series aluminum alloys that are used to produce Boeing’s wing and fuselage components. The forms will include aluminum extrusions, sheet and plate products. Initially about 8 million pounds of aluminum is expected to be recycled per year. The program will also help to collect scrap from Boeing sub-contractors, and will enable expansion to include other aluminum scrap forms including chips that remain as residue.
Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. Alcoa, which is among the prominent players in the mining industry along with Aluminum Corporation of China Limited , and BHP Billiton Limited (BHP - Analyst Report), is a world leader with respect to production and management of primary aluminum, fabricated aluminum, and alumina as well as the world’s largest miner of bauxite and refiner of alumina.
Alcoa released its first quarter 2013 results in Apr 2013. The company saw its profit surge roughly 59% in the quarter, buoyed by strong aluminum demand. It posted a profit of $149 million or 13 cents per share in the quarter, exceeding the profit of $94 million or 9 cents recorded a year ago. The results were driven by strong demand across the aerospace and auto markets.
Excluding one-time special items, Alcoa earned $121 million or 11 cents a share in the quarter, beating the Zacks Consensus Estimate by a penny and also coming ahead of $105 million or 10 cents per share posted in the year-ago quarter.
Revenues declined roughly 3% to $5,833 million from $6,006 million in the year-ago quarter and were below the Zacks Consensus Estimate of $5,857 million. Sales were hurt by lower aluminum prices and reduced production in Alcoa’s European primary metals business.
Alcoa currently retains a short-term Zacks Rank #4 (Sell).