Aluminum May Have Reached Low: Alcoa CEO
Stubbornly low aluminum prices may have finally reached a bottom thanks to strong fundamentals and increased demand from the U.S. automotive market, Klaus Kleinfeld, CEO of aluminum giant Alcoa, told CNBC's "Closing Bell."
"I tend to believe we're seeing a low at this point," Kleinfeld said, adding he's only speculating on where the metal's price might be headed, but a strong U.S. auto market gives him reason to be optimistic.
"The automotive market in general here in North America is strong and at the same time, for aluminum, we see that, we see demand on auto sheet quadrupling in the next three years and then another, the next ten years, another two-and-a-half times growth," Kleinfeld said.
Currently, the metal's price remains near two-year lows. In turn, analysts had expected a dismal second-quarter earnings season for the U.S. aluminum producer. But Alcoa, always one of the first large companies to report, beat on both earnings and revenue.
(Read More: Alcoa Kicks Off Earnings Season With a Beat)
Earnings excluding items rose to 7 cents a share from 6 cents a share in the year-earlier period.
Revenue decreased to $5.85 billion from $5.96 billion a year ago.
After the earnings announcement, the company's shares gained in extended-hours trading. (Click here to get latest quote.)
Alcoa's stock had peaked at $45 a share in May 2008 when Kleinfeld took the helm as CEO. Since then, though, Alcoa's stock has fallen below $8 a share. In a recent research report, JPMorgan forecast Alcoa's stock would only go to $9 a share by the end of 2014. Despite this, Kleinfeld defended his leadership, noting he came to office just before the height of the financial crisis.
"We've come through the worst crisis that the world has seen and in our industry, it's been even worse than what most people have seen," Kleinfeld said. "At the same time, we used the crisis to change our portfolio and we used the crisis also to raise additional equity."
Rather than focusing on the day-to-day performance of Alcoa's stock, Kleinfeld said he looks for ways to create shareholder value, such as closing high cost facilities and opening low cost plants while attempting to eliminate legacy cost issues.
Meantime, Kleinfeld downplayed concerns of a slowdown in China. After all, he expects the People's Republic to produce 7.7 to 7.8 percent gross domestic product growth in the next quarter, which he said is in line with the average estimate among Chinese market observers.
"I am really not concerned about China. I believe that some of the tightening that we have supposedly seen is positive," Kleinfeld said. "It's a move by the new leadership, trying to reduce the overbuild activities and go more for quality growth, which is important for our business."
—By CNBC's Drew Sandholm. Follow him on Twitter
@DrewSandholm.
—Reuters contributed to this report.
