What Alcoa's Q3 Revenue Decline Means For Indian Aluminium Companies

Indian aluminium producers Hindalco Industries Ltd. and National Aluminium Co. are likely to see their revenues decline in the September quarter,  going by Alcoa Corp.'s recent performance.

The Pittsburgh-based aluminium producer's net loss narrowed by $578 million to $168 million in the third quarter of CY23. Historically, its results have been an indication of the performance of domestic aluminium companies.

Alcoa's revenue fell 8.7% year-on-year to $2.6 billion, compared to the Bloomberg consensus estimate of $2.6 billion.

Alcoa is among the largest producers of aluminium in the world.

"We saw positive improvements in raw material and production costs, but lower average realised pricing for alumina and aluminium had the biggest impact on our results," said William F. Oplinger, chief executive officer of Alcoa.

Hindalco and Nalco are expected to follow in the footsteps of Alcoa, with Bloomberg estimates indicating a 9% year-on-year decline in revenue for both. Net profit is expected to increase 17% year-on-year and 146% year-on-year, respectively, according to Bloomberg.

The profit growth, despite the revenue decline, for Indian aluminium companies is on account of lower costs. "Aluminium companies should see sequentially lower prices, more than offset by coal costs," said Kotak Institutional Equities in an Oct. 3 note.

The two aluminium companies have posted results in a similar direction to Alcoa over the past five quarters. This is because global prices of aluminium and the cost of inputs like bauxite and coal impact aluminium companies around the world in a similar way.

Below is the quarterly comparison between Alcoa and Indian companies: