Tomahawk, WI 10/10/2013 (BasicsMedia) – Alcoa Inc (NYSE:AA) relies a lot on demand of aluminum to thrive as a stock. All over the globe, the demand for aluminum has been on a downward spiral and this is having a negative impact on prices. As prices continue to drop, the stocks such as AA are not being considered attractive any more by investors. This is a company with a market cap of around $8.67 billion, and refines, smelts, fabricates, recycles and mines aluminum using several technologies. Its presence is currently being felt in 31 countries making it a truly global company.

 AA’s revenue to Decrease to $5.7 billion from $5.8 billion

 The aluminum products which AA comes up with, are used in a number of industries worldwide. These industries include aircraft, packaging, automobile, defense, oil and gas,  industrial applications, commercial transportation, building and construction, as well as consumer electronics. Its fortune has been falling and things don’t appear to be too good for this company. Last year, it collected $5.8 billion as revenue, which compares favorably with the $5.7 billion Wall Street now expects AA to make in 2013. Third quarter earnings will drop in this quarter.

 AA Experiences falling Smelting Capabilities

 There has also been a drop in the company’s smelting capabilities. It can only carry out smelting at 13% capacity thus rendering its plants idle most of the time. This could be as a result of the falling demand which has then translated into drop in prices of aluminum products worldwide. AA remains the largest producer of aluminum in the whole world. This is an important material for a number of products as demonstrated above. However, the U.S. appears to be looking elsewhere for alternatives to aluminum and this has affected AA’s performance in recent days.

 The challenge for AA is that it can’t do anything much to change the current scenario. It can’t force people to start thinking of aluminum positively and use it in their products. It has to find a way of making aluminum sound appealing to people worldwide. It has to work harder to get into the new emerging markets such as China and others. This is a very important period for the company’s survival and continued existence. It also has to work on ways of reducing its debts which are expected to grow to between $465 million and $661 million respectively.

 AA Increases its Free Cash Flow

Despite the current situation and environment under which AA has to operate, it is worth pointing out that the company has still managed to add $228 million into its coffers as free cash flow. The total amount it has as cash flow is $1.2 billion. The second quarter of 2013 loss it reported of around $119 million, pushed it to close a number of its facilities. Two of its potlines in Quebec, which has smelting capacity of around 105,000 tons per year, had to be closed as a result of the losses. But this can be reversed only if the company experiences increased demand.

As AA waits for demand to pick up, it has to find ways of tackling cash losses. This may include carrying out programs which it has started doing such as closing down some of its facilities.

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