Balaton Power Inc BPWRF

RE: not the best timing

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Alcoa faces squeeze by price falls and rising energy bills >By Dan Roberts in New York >Published: September 23 2005 03:00 | Last updated: September 23 2005 03:00 >> Alcoa, the world's largest aluminium producer, sounded alarm bells in the booming commodities industry last night with warnings of a squeeze between falling prices and higher energy costs. After months of passing on costs to customers, the US group said weakening demand could cut its profits by more than a third this quarter, compared with analyst expectations. Aluminium prices, along with other metals, have plunged in recent weeks as demand from China cooled and speculators unwound long positions. Alcoa is always the first constituent of Dow Jones Industrial Average to report quarterly earnings and is often seen as an early indicator of wider confidence in corporate America. Its shares fell 6 per cent in after-hours trading yesterday as management warned that income from continuing operations would be between 27 and 31 cents a share, against Wall St consensus forecasts of 43 cents a share. Alain Belda, Alcoa's chairman and chief executive, said: "This quarter, we are squeezed between a weaker upstream pricing environment and significantly higher energy and input costs. We continue to face challenges from escalating costs in energy and raw materials." Mr Belda has already been shedding workers and closing plants to preserve profit margins. During the third quarter, aluminium prices on the London Metal Exchange fell $80 per metric ton, and there was an additional $40 per metric ton fall in the premium for delivery to the US Mid-West. While metal prices have strengthened recently, particularly on fears of hurricane disruption, that will be reflected in the fourth quarter. The company also blamed seasonal weakness in Europe and the automotive industry for its problems. Aluminium is one of the most energy-intensive industries and has been hit hard by rising natural gas and electricity prices. Until recently energy-intensive industries such as metals and chemicals have been able to pass on their costs due to strong global demand. Last quarter for example, Alcoa, boasted its best sales and profits of $473m, or 54 cents per share. But there are increasing signs that this commodity boom may have come to an end. Last week, the nickel price fell 7 per cent in a day. Apart from copper, many other base metals have also fallen from multi-year highs of earlier this year - with nickel and tin down a quarter and a third respectively. Additional reporting by Bernard Simon in Toronto ..................................................................................... > >