(Reuters) – Aluminum producer Alcoa Corp lowered its forecast for adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for 2018 on Wednesday, citing U.S. tariffs on imported aluminum and rising energy costs.
An Alcoa aluminum plant in Alcoa, Tennessee, U.S. is seen in this April 8, 2014 file photo REUTERS/Wade Payne/File Photo
The company’s shares fell 2 percent in after-market trading, dragging shares of rival Century Aluminum Co down 1 percent.
Alcoa now expects adjusted EBITDA to range between $3.0 billion and $3.2 billion, compared to its previous forecast of $3.5 billion to $3.7 billion.
U.S. President Donald Trump imposed tariffs of 25 percent on imports of steel and 10 percent on aluminum on countries including Canada and Mexico and the European Union that went into effect in June.
Alcoa said the tariffs led to an extra $15 million in costs in the reported quarter that were mainly levied on aluminum imported from Canada, its biggest supplier.
The company operates 3 smelters in Canada which were not excluded from tariffs. Alcoa said it anticipates a negative monthly impact between $12 million and $14 million as long as the tariffs are in place.
Chief Executive Officer Roy Harvey said on a post-earnings call with analysts that even if all U.S. curtailed capacity was back online, the U.S. would still need to import 60 percent of its primary aluminum needs from Canada.
“In short, tariffs will not solve the challenges facing the aluminum industry.”
On Wednesday, the company reported adjusted earnings of $1.52 per share, and revenue of $3.58 billion for the quarter ending June 30 that beat Wall Street estimates, according to Thomson Reuters I/B/E/S.
Net income was reduced by $22 million due to rising oil and gas prices, and electricity prices in Spain, Norway and the Pacific Northwest, the company said.
Reporting by Sanjana Shivdas in Bengaluru