Boston, MA 07/04/2014 (wallstreetpr) – Alcoa Inc (NYSE:AA) warns that the approval of the proposed new warehousing rules will impact its premiums. The company has already raised the issue with the Securities and Exchange Commission and plans to address the matter with its investors.
The company said that the warehousing reforms will increase the amount of aluminum in the physical market, and that will impact the premiums that customers pay for physical delivery. Alcoa, as well as other producers of the lightweight metal, observe premiums above the London Metal Exchange (LME) benchmark on buyers who need actual delivery of the commodity.
A spokesperson for the company could not comment beyond of the SEC filing, and that means investors can keep an eye on the upcoming conference call after the release of 2Q2014 financial results next week for more details about the warehousing reforms issue.
Shifting strategy
Meanwhile, Alcoa Inc (NYSE:AA) continues to invest on manufacturing operations even as it limits its exposure to unprofitable smelters. As the company turns focus on manufacturing operations, manufacturing of aerospace components is high on its agenda.
The company announced the expansion of its Virginia plant that manufactures components of jet engines. It also has plans for two new aerospace-related plants whereby it will spend about $190 million for two separate and new facilities in Indiana. One of the facilities will be dedicated to the making of aerospace-alloys while another one will manufacture new engine parts.
Aerospace acquisition
Alcoa Inc (NYSE:AA) announced the acquisition of Firth Rixson Ltd, a U.K. company that makes aerospace components. The deal is worth $2.85 billion, of which $2.35 billion involves cash while $500 million will be settled in stock.
Many analysts believe that the company has a strong position in the aerospace and that position is underappreciated. According to Josh Sullivan, an analyst with Sterne Agree & Leach Inc, the acquisition of Firth Rixson will not only raise the profile of Alcoa Inc (NYSE:AA) in aerospace, but is also highly accretive.
