TLDR
- Alcoa stock drops despite record Q2 revenue and stronger adjusted earnings.
- Alcoa announces $4.1B South32 deal to expand global aluminum assets.
- Adjusted EBITDA jumps 51% as aluminum prices and shipments strengthen.
- Alumina production outlook lowered after Pinjarra refinery disruptions persist.
- Alcoa keeps aluminum production forecast unchanged for full-year 2026.
Alcoa Corporation (AA) shares closed at $46.85 on Thursday after falling 3.56% during regular trading. Moreover, the stock declined another 2.64% in after-hours trading to $45.61 despite reporting record quarterly revenue and stronger earnings. The company also announced a $4.1 billion agreement to acquire South32’s interests in major bauxite, alumina, and aluminum assets.
Record Revenue and Higher Earnings Support Quarterly Performance
Alcoa reported second-quarter revenue of $3.97 billion, setting a new quarterly record for the company. Additionally, revenue increased 24% from $3.19 billion in the previous quarter and improved from $3.02 billion a year earlier. Net income reached $407 million, or $1.53 per share, compared with $425 million, or $1.60 per share, during the first quarter.
Adjusted results showed stronger underlying performance across the business. Adjusted net income increased 51% sequentially to $562 million, while adjusted earnings rose to $2.12 per share from $1.40. Adjusted EBITDA excluding special items climbed 51% to $901 million from $595 million during the previous quarter.
Higher aluminum prices and stronger shipments supported the earnings improvement. Mark-to-market losses on Ma’aden shares, energy contracts, higher production costs, and unfavorable currency movements reduced reported profit. The company still generated $608 million in operating cash flow and produced $422 million in free cash flow during the quarter.
Production trends remained mixed across Alcoa’s operations during the quarter. Alumina production declined 6% to 2.2 million metric tons after operational instability at the Pinjarra refinery and gas disruptions linked to Cyclone Narelle. Aluminum production increased 5% to 636,000 metric tons following capacity restarts in Spain, Brazil, Norway and Australia.
Third-party aluminum shipments increased 18% from the previous quarter. Stronger product volumes and higher realized aluminum prices lifted Aluminum segment revenue by 31%. Alumina shipments remained stable, although lower production and reduced trading activity limited segment growth.
South32 Acquisition Expands Global Portfolio
Alcoa signed a definitive agreement to acquire South32’s interests in bauxite, alumina, and aluminum operations across Australia, Brazil, and South Africa. The transaction includes approximately $4.1 billion in upfront consideration and a contingent value right worth up to $750 million. Additionally, the acquisition strengthens Alcoa’s upstream aluminum business while expanding its global production footprint.
The company also approved a final investment decision for a gallium production facility at the Wagerup refinery in Australia. Furthermore, Alcoa announced a $65 million investment to expand recycled foundry production at its Mosjøen smelter in Norway. These projects support long-term production growth and broader strategic development.
Financially, Alcoa strengthened its balance sheet during the quarter. The company redeemed its remaining $219 million of 2028 senior notes using available cash and finished the quarter with $1.4 billion in cash. Additionally, new labor agreements covering operations in Australia, the United States, and Canada secured multi-year workforce stability.
Outlook Reflects Alumina Challenges While Aluminum Guidance Holds
Alcoa lowered its 2026 alumina production forecast to between 9.5 million and 9.6 million metric tons. Likewise, the company reduced expected alumina shipments to between 11.5 million and 11.6 million metric tons. Management attributed both reductions to continued operational issues at the Pinjarra refinery following Cyclone Narelle disruptions.
The company maintained its aluminum production outlook between 2.4 million and 2.6 million metric tons. projected aluminum shipments remain between 2.6 million and 2.8 million metric tons for 2026. Sequential operational improvements are expected to offset higher carbon costs during the third quarter.
Alcoa expects modest operational improvements in the Alumina segment during the third quarter because refinery stability has recovered. However, planned maintenance activities in Brazil will partially offset those gains. Operational tax expense is expected to range between $80 million and $90 million, depending on market conditions and regional profitability.
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