Alcoa Corporation (AA.US) Q2 earnings exceed expectations, tariff increases lead to a cost increase of over $1 billion for the quarter.

Alcoa Corporation (AA.US) has announced its second quarter earnings for 2025. Despite challenges such as declining prices for alumina and aluminum, as well as rising tariff costs, the largest aluminum producer in the United States has demonstrated strong operational performance. The financial report shows that Alcoa Corporation had a revenue of $3.018 billion in Q2, a 4% increase from the same period last year which was $2.906 billion, exceeding market expectations of $2.95 billion. The net profit attributable to the company was $164 million, compared to $20 million in the same period last year. Adjusted net profit was $103 million, compared to $30 million in the same period last year. Adjusted earnings per share were $0.39, compared to $0.16 in the same period last year, in line with market expectations. Adjusted EBITDA was $313 million, compared to $325 million in the same period last year. Alcoa Corporation maintained strong aluminum production in the second quarter and progressed with the sale of its 25.1% stake in a joint venture with Ma'aden, a Saudi Arabian mining company, which was completed on July 1, 2025, and is expected to be recognized in the third quarter of 2025. The company also received a favorable ruling in a tax dispute in Australia. Cash generated from operating activities in the second quarter was $488 million, with an ending cash balance of $1.5 billion. Additionally, the company's major actions in the second quarter included the temporary suspension of the restart of the San Ciprin smelter in Spain due to a power outage, with plans to resume the restart process once assurances from the Spanish government are obtained. It is worth noting that Alcoa Corporation stated that the additional tariff costs resulting from Canadian aluminum imports increased its costs by $115 million in the second quarter, highlighting the impact of President Trump's trade policies on the industry. In order to mitigate the additional tariff costs, the company has redistributed Canadian-produced aluminum to non-U.S. customers. The latest loss incurred by Alcoa Corporation due to tariffs was nearly six times the $20 million loss in the first quarter (when it was a 25% tariff). The Pittsburgh-based company stated that the sharp increase in tariff costs had a significant impact. Mining giant Rio Tinto plc Sponsored ADR (RIO.US) also disclosed on Wednesday that its Canadian-produced aluminum products incurred over $300 million in additional costs due to tariffs in the first half of 2025. President and CEO of Alcoa Corporation, William F. Oplinger, said, "In the second quarter of 2025, we continued to firmly execute key objectives, including advancing the sale of our stake in the Ma'aden joint venture. Despite the decline in alumina and aluminum prices, we achieved a safe, stable, and strong operational performance in this quarter." In the meantime, William F. Oplinger stated during the financial report conference call that the company has had extensive communication with the governments of the U.S. and Canada, including with President Trump himself. William F. Oplinger has repeatedly warned that American customers will ultimately bear the costs incurred by aluminum producers due to tariffs. He said, "While we are not particularly pleased with the tariffs, the prices that American customers are currently paying for aluminum are significantly higher than in other regions around the globe." Looking ahead, Alcoa Corporation projects that the total alumina production and shipment volume for 2025 will be consistent with previous forecasts, between 9.5 million and 9.7 million tons, and between 13.1 million and 13.3 million tons respectively; aluminum production is also expected to remain unchanged, between 2.3 million and 2.5 million tons. However, due to delays in the resumption of production at the San Ciprin smelter, aluminum shipment volumes are expected to decrease slightly. The company also anticipates that the adjusted EBITDA for the alumina business will improve compared to the next quarter, while the aluminum business EBITDA will worsen quarter over quarter due to the impact of U.S. "232 clause" tariffs.