The economic apocalypse that we've been suffering has, to put it mildly, been unpleasant. But on Wednesday, aluminum producer Alcoa
By watching costs like a hawk, management was able to surprisingly generate net income for the quarter of $77 million, or $0.08 a share, versus a net loss of $454 million, or $0.47 a share in the immediately preceding quarter. For the quarter ended in September 2008, however, the company earned $268 million, or $0.33 per share.
But to my way of thinking, the quarter-to-quarter improvement speaks volumes about successfully reducing costs early enough to make a meaningful difference in results. The company was also helped by the $520 million it received from a temporary stake in Rio Tinto
For instance, Alcoa now numbers about 63,000 employees, down 20,000 from the start of its "Cash Sustainability Program." Beyond that, the company is doing wonders in getting ahead of its targeted goals for the program. Its overhead savings have already reached 188% of the full year's target for this year, while procurement savings and a lowering of the working capital base are both way ahead of plan.
Looking at the results for the specific segments, Alumina, Primary Metals, and Flat-Rolled Products all improved substantially from the second quarter on the basis of strengthening markets -- including the automotive sector -- and improved pricing. In fact, the only laggard was Engineered Products and Solutions, where earnings slid 15% quarter over quarter in part due to aerospace destocking -- excluding commercial producers like Boeing
The company also noted that there are signs in the second half of this year that key markets it serves are strengthening. So we have super-strong results from the first of the major companies to report. We'll now have to await a confirmation of an improving economy from other Dow Jones Industrial members like Caterpillar
As for Alcoa, I suggest strongly that the company deserves Foolish attention. Frankly, I'm amazed by its improvement, and if I hadn't just written about it, I could be a buyer. But I can't, and that's as it should be. You can, however, purchase the company's stock.