Alcoa's 2Q profit sinks 24 percent on higher costs

The Pittsburgh-based company earned $546 million, or 66 cents per share, for the quarter that ended June 30, compared with $715 million, or 81 cents per share, during the same period a year earlier.

Quarterly revenue dropped about 6 percent to $7.6 billion.

Alcoa is the world's third-largest aluminum producer and the first of the Dow Jones industrial average components to report quarterly earnings.

Results beat Wall Street estimates. Analysts, on average, expected profits of 64 cents per share on revenue of $7.36 billion.

Facility disruptions weighed down results by a total of $39 million, Alcoa said. They included a natural gas pipeline explosion in western Australia that curtailed supplies to an Australian affiliate, Alcoa World Alumina and Chemicals, and the temporary idling of half the production at its Rockdale, Texas, smelter due to power supply interruptions.

The explosion in western Australia cut profitability by $17 million, while the power troubles in Rockdale forced Alcoa to step up electricity purchases at market rates, bringing down income by some $22 million.

In a conference call with analysts and reporters, Alcoa Chief Executive Klaus Kleinfeld said the company expects the global aluminum industry's supply to remain in line with demand for the year, despite sluggish markets in the U.S. and Europe.

Growth in China will likely remain strong, he said, with consumption projected to rise nearly 20 percent this year.

The company forecasts growth of 6 percent annually in the global industry over the next decade, fueled by gains in Asia, Kleinfeld said.