As is typically the case, Pittsburgh-based aluminum manufacturer Alcoa (NYSE: AA) kicked off earnings season for the big companies on Monday. And while the company's quarter could have been considered a squib in football parlance, it nevertheless managed to mix in enough positive analysis regarding what lies ahead to render its results anything but a disaster.

Of course, Alcoa did post a loss, following several quarters recorded in black ink. And while the quarterly results failed to even meet even analysts' meager expectations of $0.01 in per-share earnings, it's clear that management has taken meaningful steps to cut costs to ride out the current downturn with at least a modicum of success. For the quarter, the company reported a net loss of $191 million, or $0.18 a share, compared with year-ago earnings of $258 million, or $0.24. However, if you back out the latest quarter's $185 million in one-time charges, the loss declines to $34 million, or $0.03 a share. Revenues, at $6 billion, was up 6% year-over-year.

The bulk of the charges related to the closing or curtailment of 531,000 metric tons of capacity to provide the company with a leg up amid softened market conditions, including a 12% slide in aluminum prices during the quarter and a 27% drop from their April high. Specifically, 240,000 tons of capacity was curtailed at company smelters in Italy and Spain, while the decision to close the smelter in Alcoa, Tennessee, along with two lines at Rockdale, Texas, lowered capacity by another 291,000 tons. The total result was a pull-back of 12% in the big producer's worldwide smelting capacity.

Looking at the company's individual segments, the after-tax operating income from the alumina unit (which turns out a key ingredient in the manufacture of aluminum) increased 92% year-over-year, while the ATOI for flat-rolled products along with engineered products and solutions were up 4% and 8%, respectively,  from the final quarter of 2010. Conversely, the ATOI from primary metals, the company's key segment, tumbled to a negative $32 million, from a positive $210 million a year ago. 

As to expectations for 2012, Alcoa's CEO Klaus Kleinfeld continues to expect total global demand for the year to increaseby 7% from the 2011 level. At the same time, that forecast, along with production cutbacks,  results from an anticipated shortfall of 600,000 metric tons in global output for the year.

Given that aluminum frequently is substituted for copper when the latter's price escalates vertiginously, Alcoa's picture will be clarified further next week when Freeport-McMoRan Copper & Gold (NYSE: FCX)  reports its expectations for demand levels 2012. Further, unless the picture from smaller aluminum producers Century Aluminum (Nasdaq: CENX) and Kaiser Aluminum (Nasdaq: KALU) -- both of which will report in February -- is surprisingly less optimistic than the look-ahead provided by the bigger company, I'm inclined to be a far better buyer than seller of Alcoa at current levels.

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