Aluminum giant Alcoa (NYSE:AA) released its first-quarter results today after the closing bell. The company reported a net loss of $178 million, or $0.16 per share. However, excluding special items Alcoa's net income was actually $98 million, or $0.09 per share, which was nearly twice what analysts were expecting. This was despite revenue falling to $5.5 billion as aluminum prices fell 8% year-over-year.

Alcoa's reported loss was due to $276 million in special items largely tied to smelter and rolling mill capacity reductions. Excluding the impact of those special items, the company delivered very strong profitability. The company delivered record first-quarter profitability from its Engineered Products and Solutions segment, which was up 9% year-over-year. Meanwhile, the profitability of its Global Rolled Products segment tripled. Finally, its upstream segments improved performance for the 10th straight quarter.

While Alcoa continues to reduce its operated smelting capacity, which is down 28% since 2007, it instead is increasing the capacity at its higher-margin businesses. In the first quarter, the company invested $300 million to expand its automotive division in the U.S. Meanwhile, overseas it also invested to double its Dura-Bright wheel production in Hungry while it spent $40 million to invest in a high-value specialty packaging facility in Brazil. These changes to its portfolio will further enhance Alcoa's profitability in the future.

In a press release commenting on the quarter, CEO Klaus Klienfeld said that Alcoa's "transformation is accelerating -- we're powering growth in our value-add business and aggressively reshaping our commodity business." This transformation enabled the company to increase its profitability this past quarter despite falling aluminum prices.  

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