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| Information Source: Alcoa Corporation |
| Alcoa Corporation (NYSE: AA; ASX: AAI) today reported results for the second quarter of 2025 that reflect strong operational performance and a sequential increase in cash despite lower prices for alumina and aluminium and increased tariff costs. |
- Maintained operational performance, including strong aluminium production
- Progressed the sale of Alcoa’s full ownership interest of 25.1 per cent in the joint venture with Saudi Arabian Mining Company (Ma’aden), which closed on July 1, 2025
- Received a favourable decision on the Australian tax dispute
- Redirected Canadian-produced aluminium to customers outside the U.S. to mitigate additional tariff costs, while maintaining advocacy efforts policymakers
- Generated $488 million in cash from operations, a sequential improvement of $413 million
- Finished the second quarter of 2025 with a cash balance of $1.5 billion
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| “In the second quarter of 2025, we continued our relentless execution on key objectives, which included progressing the sale of our interest in the joint venture with Ma’aden,” said Alcoa President and CEO William F. Oplinger. “We delivered on safety, stability, and operational performance in the quarter despite lower alumina and aluminium pricing.” |
| Second Quarter 2025 Results |
- Production: Alumina production was flat sequentially at 2.4 million metric tons. In the aluminium segment, production increased 1 per cent sequentially to 572,000 metric tons primarily due to continued progress on the Alumar, Brazil smelter restart.
- Shipments: In the Alumina segment, third-party shipments of alumina increased 4 per cent sequentially, primarily due tothe timing of shipments and increased trading, partially offset by lower sales of externally sourced alumina to fulfil customer commitments. In aluminium, total shipments increased 4 per cent sequentially, primarily due to the timing of shipments.
- Revenue: The Company’s total third-party revenue of $3.0 billion decreased 10 per cent sequentially. In the Alumina segment, third-party revenue decreased 28 per cent due to a decrease in average realised third-party price, partially offset by increased shipments. In the aluminium segment, third-party revenue increased 3 per cent on increased shipments favourable currency impacts, partially offset by a decrease in average realised third-party price. Increases in the Midwest premium (U.S. and Canada) were more than fully offset by lower average London Metal Exchange prices (on a 15-day lag), resulting in decreased average realised third-party price of aluminium.
- Net income attributable to Alcoa Corporation was $164 million, or $0.62 per common share. Sequentially, the results reflect lower alumina and aluminium prices and increased tariff costs on imported aluminium. Additionally, the results reflect decreased income taxes primarily due to lower earnings favourable changes in mark-to-market contracts (see below).
In the second quarter of 2025, Alcoa incurred approximately $115 million for tariff costs on imports of aluminium to the U.S. from Canada. U.S. Section 232 tariffs were 25 per cent from March 12, 202,5, until increasing to 50 per cent on June 4, 2025.
- Adjusted net income was $103 million, or $0.39 per common share, excluding the impact of net special items of $61 million. Notable special items include mark-to-market gains on foreign exchange and energy contracts of $79 million, partially offset by net restructuring charges of $14 million.
- Adjusted EBITDA excluding special items was $313 million, a sequential decrease of $542 million primarily due to lower alumina and aluminium prices and increased tariff costs on aluminium imported to the U.S.
- Cash: Alcoa ended the quarter with a cash balance of $1.5 billion. Cash provided from operations was $488 million. Cash used for financing activities was $67 million, primarily related to $37 million of net payments on short-term borrowings and $27 million in cash dividends on stock. Cash used for investing activities was $132 million, primarily due to capital expenditures of $131 million. Free cash flow was $357 million.
- Working capital: For the second quarter, Receivables from customers of $1.0 billion, Inventories of $2.2 billion and Accounts payable, trade of $1.6 billion comprised DWC's working capital. Alcoa reported 47 days working capital consistent with the first quarter of 2025, with an increase in inventory days fully offset by an increase in accounts payable days and a decrease in accounts receivable days. The change in inventory and accounts payable days was primarily due to decreased sales. Accounts receivable decreased primarily due to lower pricing for alumina.
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| Key Actions |
- San Ciprián complex: The restart of the San Ciprián smelter was paused in April 2025 following a widespread power outage across Spain until the Spanish Government could provide sufficient details on the cause of the power outage and the measures being taken to prevent a recurrence. On July 14, 2025, the Company and its joint venture partner, IGNIS Equity Holdings, SL, announced that the restart process of the San Ciprián smelter would resume after reviewing the Spanish Government’s report on the circumstances that caused the power outage, and the planned measures and investments aimed at providing improved grid resilience, and receiving assurances from the Spanish Government that it will continue to promote measures to provide reliable and competitive energy. The Company expects that the restart will be completed by mid-2026.
Based on recent pricing, the Company expects to record a net loss (pre-tax and noncontrolling interest) for the smelter of approximately $90 million to $110 million, or $0.35 to $0.42 per common share in 2025, and associated cash used by operations for the smelter is expected to approximate $110 million to $130 million in 2025. The unfavourable change from prior estimates is due to the delay in the completion of the restart and related revenue from 2025 to 2026.
- Ma’aden joint venture: On July 1, 2025, Alcoa completed the sale of its full ownership interest of 25.1 percent in the Ma’aden joint venture, comprised of the Ma’aden Bauxite and Alumina Company and the Ma’aden Aluminium Company, to Ma’aden for total consideration of $1.35 billion, comprised of 85,977,547 shares (valued at $1.2 billion as of closing) and $150 million in cash (to be used primarily for related taxes and transaction costs). In the third quarter of 2025, Alcoa expects to recognise a gain of approximately $780 million and subsequent changes in fair value of the shares within Other income. Consistent with prior transactions, Alcoa reflects gains or losses from non-core asset sales and mark-to-market financial instruments as special items.
- Australian tax decision: On April 30, 2025, Alcoa received favoa urable decision from the Administrative Review Tribunal of Australia (ART) about a review of decisions of the Australian Taxation Office (ATO) regarding certain disputed tax liabilities. The dispute related to the transfer pricing of certain historic third-party alumina sales, under which the ATO asserted that additional tax was owed. The ART decided that no additional tax is owed, consistent with Alcoa’s long-held position related to this matter. The ATO did not appeal the decision, and the disputed claims (and additional related interest and penalties) have been withdrawn. By the ATO’s dispute resolution practices, Alcoa previously paid $69 (A$107) million, representing 50 per cent of the assessed income tax amount, which was refunded with $9 (A$13) million of accrued interest in July 2025. Accrued cash taxes of $225 (A$346) million related to interest deducted against taxable income through the decision date are payable by Alcoa by June 1, 2026.
- Tariffs: During the second quarter of 2025, Alcoa redirected aluminium produced by the Company’s Canadian smelters to customers outside the U.S. to mitigate additional tariff costs. Additionally, the Company maintained active engagement with administrations, governments, and policymakers, primarily in the U.S. and Canada, regarding the impacts of tariffs.
- Western Australia mine approvals: On May 29, 2025, the Western Australian Environmental Protection Authority (WA EPA) opened a 12-week public comment period on the Company’s two mine plans in Western Australia, which include the plan for the next major mine regions (Myara North and Holyoake) and the rolling five-year mine plan (2023-2027) referred to the WA EPA by a third-party in 2023. Following this public consultation period and the Company’s response to any clarifications requested by the WA EPA, the WA EPA will publish its assessment and recommendations. An appeals process of the assessment and recommendations will follow before Ministerial decisions are finalised.
The Ministerial decisions were expected by the first quarter of 2026, per the indicative timeline the WA EPA set in the third quarter of 2024. From both the Company and the WA EPA perspective, the indicative timeline is no longer achievable primarily due to the complexity related to advancing both mine approvals, the extensive documentation provided by the Company and independent experts, and the additional work expected in summarising and responding to submissions received in the public comment period. At the end of the public consultation, the Company expects that a revised timeline will be published. The Company is committed to continuing to work collaboratively with the WA EPA and other stakeholders to achieve Ministerial decisions as early as possible in 2026. The Company has multiple contingency plans and expects to access bauxite similar to recent grades until the Company can transition to the new mine regions.
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| 2025 Outlook |
| The following outlook does not include reconciliations of the forward-looking non-GAAP financial measures Adjusted EBITDA and Adjusted Net Income, including transformation, intersegment eliminations and other corporate Adjusted EBITDA; operational tax expense; and other expense; each excluding special items, to the most directly comparable forward-looking GAAP financial measures because it is impractical to forecast certain special items, such as restructuring charges and mark-to-market contracts, without unreasonable efforts due to the variability and complexity associated with predicting the occurrence and financial impact of such special items. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results. |
| Alcoa expects 2025 total Alumina segment production and shipments to remain unchanged from its prior projection, ranging between 9.5 to 9.7 million metric tons, and between 13.1 and 13.3 million metric tons, respectively. The difference between production and shipments reflects trading volumes and externally sourced alumina to fulfil customer contracts due to the curtailment of the Kwinana refinery. |
| Alcoa expects 2025 total aluminium segment production to remain unchanged from its prior projection, ranging between 2.3 and 2.5 million metric tons. The Company has decreased its 2025 projection for aluminium shipments to range between 2.5 and 2.6 million metric tons, a reduction of between 0.1 and 0.2 million metric tons from the prior projection, primarily due to the reduced production at the San Ciprián smelter as a result of the delayed restart. |
| Within the third quarter of 2025, Al ,mina Segment Adjusted EBITDA, the Company expects sequential favourable impacts of approximately $20 million due to lower maintenance costs and efficiencies at higher production rates. |
| For the third quarter of 2025, the Aluminium segment expects sequential unfavourable impacts of approximately $90 million due to U.S. Section 232 tariffs on imports of aluminium from Canada. Alumina costs in the Aluminium segment are expected to be favourable by approximately $100 million sequentially. |
| The Company expects Other expenses for the third quarter er 2025 to remain consistent with the second quarter of 2025. |
| Based on current alumina and aluminium market conditions, Alcoa expects third quarter 2025 operational tax expense to approximate $50 million to $60 million, which may vary with market conditions and jurisdictional profitability. |
| For the full document, click the link below |
| Alcoa Corporation |
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