Alcoa Corporation (AA) has seen its shares slide as the global aluminum market faces considerable changes catalyzed by Trump’s 25% tariffs on all aluminum and steel imports. Reports suggest that this could prompt a reshuffling of global trade patterns and an increase in costs for US buyers. Alcoa’s strategic actions, including acquiring Alumina Limited, have positioned it as one of the world’s largest bauxite and alumina producers. The company has seen growth over the past year, primarily driven by the high demand for aluminum in Europe and North America, coupled with strong performance in the electrical and packaging markets and a recovery in the building and construction sector. While it’s likely tariffs will have little impact on the company’s margins as cost increases will be passed through to end buyers, it’s not all smooth sailing; CEO Bill Oplinger has warned that the new tariffs could cost up to 100,000 American jobs in the aluminum industry.
Potential Tariff Impacts
Alcoa Corporation is a global player involved in producing and selling bauxite, alumina, and aluminum products. The company primarily engages in bauxite mining operations and its conversion into alumina and other industrial chemical products.
President Donald Trump’s proposed 25% tariffs on goods from Mexico and Canada are raising concerns within the aluminum industry. According to Alcoa CEO Bill Oplinger, these tariffs could potentially result in the loss of 20,000 direct U.S. aluminum industry jobs and 80,000 indirect jobs. Oplinger further opined that the U.S. is already short of 4 million metric tons of aluminum annually, a deficit that is offset predominantly by imports from Mexico and Canada.
The tariffs have prompted Alcoa to advocate for an exemption on Canadian imports, which would allow approximately two-thirds of the metal consumed in the U.S. to continue being imported tariff-free. If a tariff is waged against Canada, it could shift global aluminum production to Europe.
Strong Recent Financial Growth and Outlook
In Q4 2024, Alcoa saw revenue rise by 20% to $3.5 billion, and net income increased by 124% to $202 million, or $0.76 per common share. For FY 2024, the revenue rose by 13% to $11.9 billion, and the net income grew to $60 million, or $0.26 per common share. The adjusted EBITDA, excluding special items, rose to $1.6 billion.
The company finished 2024 with a cash balance of $1.1 billion, reflecting proceeds of $737 million from a green bond issuance and repayment of Alumina Limited debt worth $385 million.
Management has given guidance to expect the total Alumina segment production in 2025 to range between 9.5 to 9.7 million metric tons and shipments between 13.1 and 13.3 million metric tons. The total Aluminum segment production is expected to range between 2.3 and 2.5 million metric tons, with shipments between 2.6 and 2.8 million metric tons.
