Profitability was reported across all segments, with the primary metals business showing resilience in the face of market headwinds and the alumina business delivering its strongest first half results in eight years.
Q2 2015 revenue rose to $5.9 billion, from $5.8 billion at the same time last year, up 1% year-over-year.
This was achieved in part by organic growth in aerospace, automotive and alumina, combined with acquisitions, which offset losses caused by the divesting and closing of lower-margin businesses – such as close the Anglesea coal mine and power station in Victoria – and market headwinds.
Alcoa chairman and CEO Klaus Kleinfeld said this revenue shift reflected the effectiveness of the company’s continued portfolio transformation to drive higher profitability.
“We continue to transform Alcoa; our portfolio reshaping combined with smart investments in growth markets is delivering strong results,” he said.
“Our value-add businesses are outperforming, with record profitability in the downstream and exciting profitable growth in the midstream.
“Recent acquisitions are fully on track, and paired with our innovations we are cementing Alcoa’s position as a premier aerospace and automotive partner.
“In the upstream, our alumina business delivered its best first half since 2007 and our lower cost metals business showed resilience in the face of strong market headwinds. Productivity and cash generation were excellent.”
Market headwinds resulted in a reduction in after-tax operating income across the alumina (down $6 million sequentially from $221 million) and primary metals businesses (down $120 million sequentially from $187 million).
However, increased productivity and higher volume partially offset the alumina pricing impacts.
Alcoa’s productivity targets remain on track, with $324 million achieved in year-on-year productivity gains and $562 million through the first half of 2015 against a $900 million annual target, driven by process improvements and procurement savings across all segments.
Through the first half of the year, Alcoa managed return-seeking capital of $283 million against a $750 million annual target and controlled sustaining capital expenditures of $240 million against a $725 million annual plan.
Free cash flow for the quarter was $205 million, with cash provided from operations of $472 million.
Alcoa ended the quarter with cash on hand of $1.3 billion, and on July 7, extended the maturity date of its $4 billion revolving credit line to July 2020.