Alcoa sees brighter 2013, but remains cautious

(Reuters) - Alcoa Inc , the largest aluminum producer in the U.S., expressed cautious optimism that demand for the metal will continue to grow in 2013, helped in part by global growth in the aerospace and construction markets.
The company posted a fourth-quarter profit on Tuesday, in line with Wall Street expectations, and handily beat expectations on revenue, helping calm investors' nerves after a rocky 2012.
"I'm more optimistic that 2013 is a year with upside potential compared to where we came from," Alcoa Chief Executive Klaus Kleinfeld told CNBC on Tuesday.
Shares of Alcoa rose 1.3 percent in after-hours trading, as investors were buoyed by Alcoa's turn to profit.
Analysts breathed a sigh of relief from the results of the first S&P 500 company to report fourth-quarter results, hoping it was a sign of things to come.
"I think it was a good solid quarter. Not a barnburner but a good quarter," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills. "It's certainly important in this type of environment to look at revenues."
Investors tend to scrutinize Alcoa's results for hints on where the overall economy is headed, as the company's aluminum products are used in the automotive, appliance and airline industries.
The company said it expects global aluminum consumption growth of 7 percent in 2013, up slightly from 6 percent in 2012. Alcoa continues to forecast a doubling of global aluminum demand between 2010 and 2020.
Alcoa forecasts global growth in the aerospace, automotive and construction markets, among other industries, in 2013.
PROFIT IN LINE
The earnings were a positive turn for Alcoa, whose core business of mining bauxite and producing aluminum has been hit in recent years by a persistently low metal price.
For the fourth quarter, the company reported net income of $242 million, or 21 cents per share, compared with a net loss of $191 million, or 18 cents per share, in the year-ago period.
Excluding one-time items, net income was $64 million, or 6 cents per share, in line with average analysts' expectations of 6 cents a share on revenue of $5.6 billion, according to Thomson Reuters I/B/E/S.
Sales were $5.89 billion, beating analysts' expectations, but down 1.5 percent from the year-ago quarter as the average realized price per tonne of aluminum fell slightly.
Alcoa trimmed costs by 12 percent in the fourth quarter, due in part to fewer restructuring expenses.
The company's realized price for aluminum fell roughly 11 percent in 2012.

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Alcoa earnings as expected, revenue tops forecasts

NEW YORK (AP) -- Alcoa Inc. on Tuesday reported fourth-quarter earnings that met Wall Street's expectations, and the company said it expects slightly higher demand for aluminum this year.
The sluggish global economy has weakened prices for aluminum used in everything from airplanes to soda cans.
But Alcoa forecast demand growing 7 percent in 2013, up from a 6 percent gain in 2012. It sees the best prospects in aerospace but slower improvement in demand for autos, packaging, and building and construction materials.
Separately, the company announced that Chief Financial Officer Charles D. McLane Jr., 59, will retire and be replaced by William F. Oplinger, the chief operating officer of Alcoa's primary-products business unit. The change will happen April 1.
Oplinger, 45, joined Alcoa in 2000 and has held several finance and planning jobs. He is on the executive council, which plots company strategy.
In the fourth quarter, Alcoa's net income was $242 million, or 21 cents per share. That includes one-time gains like income from selling a hydroelectric project on the Tennessee-North Carolina border.
Without those gains, the company would have made 6 cents per share — exactly what analysts expected, according to FactSet — on revenue of $5.90 billion. Sales were higher than the $5.58 billion that analysts predicted.
A year ago, the company posted a fourth-quarter loss of $191 million, or 18 cents per share, on revenue of $5.99 billion, and a loss after special items of 3 cents per share.
The company said it hit record profits in its aluminum-rolling and product-making businesses while cutting costs in its mining and refining or "upstream" segment.
Chairman and CEO Klaus Kleinfeld said the company overcame volatile aluminum prices and global economic weakness and was in "strong position to maximize profitable growth" in 2013.
Kleinfeld said aerospace sales were helped by aircraft-order backlogs at Airbus and Boeing, plus improved profits at the world's airlines.
The price that Alcoa received for aluminum fell 2 percent from a year ago but rose nearly 5 percent from the third quarter. Shipments were flat from a year ago.
The low prices were a factor in the announcement last month by Moody's Investor Service that it could downgrade Alcoa's credit rating to junk status. Alcoa has been trying to reduce debt to keep its investment-grade rating. In the fourth quarter, it cut spending by 12 percent to $6.23 billion.
Alcoa is the first company in the Dow Jones industrial average to report fourth-quarter earnings. Because it makes aluminum for so many key industries, investors study Alcoa's results for clues about the health and direction of the overall economy.
Alcoa shares ended regular trading where they began, unchanged at $9.10. In after-hours trading following the earnings report, the stock rose 8 cents to $9.18.

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Golf-Rose, Dufner, Olazabal add more stardust to Qatar Masters

Jan 8 (Reuters) - Twice U.S. Masters champion Jose Maria Olazabal, Briton Justin Rose and American Jason Dufner will join several other big names at this month's Qatar Masters, organisers said on Tuesday.
World number four Rose and ninth-ranked Dufner join former world number one Martin Kaymer and Ryder Cup teammates Sergio Garcia and Paul Lawrie, who announced on Monday they would play in the $2.5 million event.
Olazabal, 46, captained Europe to a memorable comeback victory over the United States in the biennial Ryder Cup in September and won his last title in 2005.
"Jose Maria Olazabal is a golfing great... he is assured of an especially warm reception at Doha Golf Club," Qatar Golf Association president Hassan Al Nuaimi said on the European Tour website (www.europeantour.com).
The Jan. 23-26 event is part of the European Tour's Middle East swing which also includes next week's Abu Dhabi Championship featuring world number one Rory McIlroy and 14-times major winner Tiger Woods and the Jan. 31-Feb. 3 Dubai Desert Classic. (Writing by Tom Pilcher, Editing by Pritha Sarkar)

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Rose, Dufner, Olazabal add more stardust to Qatar Masters

(Reuters) - Twice U.S. Masters champion Jose Maria Olazabal, Briton Justin Rose and American Jason Dufner will join several other big names at this month's Qatar Masters, organizers said on Tuesday.
World number four Rose and ninth-ranked Dufner join former world number one Martin Kaymer and Ryder Cup teammates Sergio Garcia and Paul Lawrie, who announced on Monday they would play in the $2.5 million event.
Olazabal, 46, captained Europe to a memorable comeback victory over the United States in the biennial Ryder Cup in September and won his last title in 2005.
"Jose Maria Olazabal is a golfing great... he is assured of an especially warm reception at Doha Golf Club," Qatar Golf Association president Hassan Al Nuaimi said on the European Tour website (www.europeantour.com).
The January 23-26 event is part of the European Tour's Middle East swing which also includes next week's Abu Dhabi Championship featuring world number one Rory McIlroy and 14-times major winner Tiger Woods and the January 31-February 3 Dubai Desert Classic.

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European events as strong as any in world: Tour chief

(Reuters) - Europe's economic plight has not affected the continent's premier golf circuit and the tour still has some of the best events in the world, chief executive George O'Grady said on Tuesday.
The European Tour is increasingly spreading its wings beyond Europe to the Far East in terms of venues and O'Grady is full of optimism for this season despite the move to the U.S. PGA Tour of top performers like world number one Rory McIlroy.
"We have a lot of great tournaments on our schedule in 2013 and we have certain periods of the year where we have groups of tournaments that are as strong as any in the world," O'Grady told the tour website (www.europeantour.com).
"We have had a very challenging five-year period but part of the reason we have managed to retain a lot of our biggest sponsors is the fact the European Tour is a tremendous product for someone looking to spend their sponsorship or touristic dollars."
The tour is poised for a three-week Middle East swing after this week's 2013 opener, the Volvo Golf Champions in South Africa, before visiting countries like India, South Korea and China over the next 11 months.
The first event to be played in Bulgaria, the World Match Play Championship in May, is another highlight for a tour which has been battling against the Eurozone crisis.
"Through our television platforms in key markets, as well as making our events as good as they can possibly be, we bring visibility and credibility. We have had great success in many countries as a result of that," said O'Grady.
"In Ireland, Scotland and Portugal the golfing tourism numbers are growing again.
"You see that in a lot of the countries we visit across the world and I think it shows that if you can get the structure right then we can face the future with optimism."
Less than half of the tournaments on the 2012-13 schedule are due to be played in mainland Europe and O'Grady spoke late last year of his "disappointment" at losing events in Eurozone countries.
O'Grady added there were some sponsor-less tournaments on the schedule that were now owned or promoted by the tour, citing the Hong Kong Open which is absent for the first time since 2001 but will return next season.
However 2013 paints a different picture, said O'Grady.
"Money is one factor in tournaments being a success but if you look at the strongest parts of our international schedule the money is already very strong," he said.
"So, in terms of our top events, I think we are now trying to focus on running the tournaments exceptionally well which we have done for the past year."

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Veteran broker departures shift $133 billion client assets in 2012

NEW YORK (Reuters) - Brokerages saw top advisers depart in droves last year and shift $132.5 billion in client assets with them, a Reuters tally shows, creating headaches for some Wall Street banks at a time when wealth management is becoming an increasingly important part of business.
Unprecedented signing bonuses, cultural changes linked to acquisitions, a push to cross-sell company products, and a growing charm of joining regional outfits contributed to many of these exits which are likely to continue this year, recruiters and brokers said.
All told, at least 880 veteran brokers and their teams changed firms in 2012, according to the data, which tracks the moves of top individual advisers and teams that manage $100 million or more in client assets. That included the departure of at least 16 $1 billion-plus advisers or teams, a number wealth management recruiters say they usually see over several years, not in 12 months.
Morgan Stanley Wealth Management - the brokerage majority owned by Morgan Stanley and partially owned by Citigroup - felt the brunt of defections in 2012, with the departure of at least 243 veteran advisers who managed more than $39.2 billion. Bank of America Corp's Merrill lost at least 184 advisers who managed more than $28.5 billion.
The two largest U.S. brokerages by headcount each lost at least six teams that managed $1 billion or more in client assets apiece - easily the size of an entire office branch.
"Our strategy is to attract the industry's best talent for our clients, and to size our adviser population to meet market opportunity," Merrill spokesman Matt Card said.
Morgan Stanley declined to comment.
Several major Wall Street banks such as Morgan Stanley and UBS AG are betting on wealth management for steady income and growth, as a weak global economy and financial regulation hit profits from other businesses such as trading and investment banking. At Morgan Stanley, for example, the wealth management unit accounted for 44 percent of third-quarter revenue, excluding one-time charges.
While adviser defections may not immediately make a big dent in the more than $1 trillion in assets the top brokerages manage, the losses can add up over time. Losing $1 billion in client assets, for example, can translate into loss of more than $10 million in annual revenues for a firm.
"We'll start to see some impact on the revenue side of the equation," as bigger advisers continue to depart, said Memphis-based banking analyst Marty Mosby of Guggenheim Partners.
"(Bigger firms) will have to make sure their resources are being applied in the most efficient way possible," and will need to make existing client assets more productive, he said.
U.S. brokerages have already begun to move in that direction, adding incentives to their 2013 pay plans to coax advisers to sell bank products.
Wells Fargo & Co's Wells Fargo Advisors and UBS Wealth Management Americas fared better in terms of recruiting and retaining veteran advisers in 2012. UBS offered some of the richest retention and sign-on bonuses in the industry and Wells benefited from its independent brokerage division, which allows advisers to own their practices. Even so, at least 82 veteran advisers departed Wells and 67 left UBS.
UBS is "always looking at attracting the top advisers," while also making the firm a place advisers want to stay, spokeswoman Karina Byrne said. "Our low attrition rates show that we are succeeding."
Wells managing director Ron Sallett said 2012 was the second best recruiting year for the company's independent brokerage unit since it was founded more than a decade ago. "We think our firm is continuing to position itself in the market as the firm of choice," he said.
BIG BONUSES
Signing bonuses for top advisers are now around 350 percent of the broker's annual revenue, with 180 to 200 percent offered upfront, said Tom Lewis, a New Jersey-based lawyer for Stark & Stark. An adviser who generates about $1 million in annual revenue might receive as much as $2 million on day one from a rival firm.
"They're in a range that we haven't seen approached before," said Lewis, who works with advisers making the transition to a new firm. "It's a long-term investment, yet your short-term profitability suffers."
UBS, for example, said it had a 10 percent increase in compensation commitments and advances related to recruited financial advisers in the third quarter from the year prior. The cost-to-income ratio - a measure of profitability - at UBS's U.S. brokerage was at 86.1 percent at the end of September, compared with 66.5 percent for its global wealth management unit, which doesn't have to offer such bonuses.
Half of the big brokerage advisers who left their firms became independent advisers, joined an independent advisory firm or moved to a smaller firm like Raymond James Financial Inc or Ameriprise Financial Inc, the data shows. They took $35.2 billion in client assets with them.
"Our expectations for 2013 (recruiting) are very promising," said Raymond James' Private Client Group President Tash Elwyn.
These firms offer lower signing bonuses, but advisers who made the move say there are other attractions, such as the ability to focus more on their clients' investment needs rather than also worrying about the company's bottom line.
Departing wirehouse advisers also pointed to concerns about a perceived push to cross-sell bank or company-branded products at their old firms, increased layers of management and cultural conflicts stemming from the acquisition of their firm by larger companies.
Illinois-based advisers Ziv Ohel and William Duncan, who together managed $275 million in client assets at Morgan Stanley, left the firm in mid-November. Ohel said they joined Minneapolis-based Ameriprise because the firm focused more on financial planning and had less of a big brokerage mentality.
Independence is also increasingly attractive to advisers. HighTower Advisors LLC, Focus Financial Partners LLC and Dynasty Financial Partners LLC each lured at least one team with $1 billion or more in client assets.

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Global shares, oil dip, but growth prospects limit falls

 World stocks and oil prices eased on Monday ending a new year rally as some investors chose to book profits, but signs of a brightening global economic growth outlook limited the falls.
Wall Street looked to set to follow a similar path after the benchmark Standard & Poor's index surged to a five-year high on Friday when data showed employers kept up a steady pace of hiring in December and the vast services sector had expanded.
The numbers compounded the effect from the last-minute deal to avert a U.S. fiscal crisis reached at the start of the year and, along with surveys showing China's factory output rising, have boosted hopes for economic expansion worldwide in 2013.
"Overall, the market's positive trend is still intact," Lionel Jardin, head of institutional sales at Assya Capital in Paris, said of the trend in stocks. "The market is ripe for a pause, but with so much cash on the sidelines, there are a lot of buyers showing up each time we have a dip."
After touching a 22-month peak last week, the FTSE Eurofirst index of top European shares was down 0.2 percent at 1,164 points. Br itain's FTSE 100 index was down 0.3 percent, Germany's DAX indexfell 0.5 percent and France's CAC 40 eased 0.6 percent.
Asia-Pacific shares outside Japan, which reached their highest levels since August 2011 on Thursday, eased 0.1 percent, while Tokyo's Nikkei share average ended down 0.8 percent, just below a 23-month high.
MSCI's broad world equity index was down 0.15 percent but was still not far from an 18-month peak scaled when investors returned to the market after the immediate U.S. fiscal crisis was averted by a political deal in Washington.
Financial shares outperformed the broader market after the Basel Committee of banking supervisors agreed to give banks four more years and greater flexibility than previously envisaged to build protective cash buffers. That means they can use more of their reserves to lend and help economies grow.
The STOXX 600 European banking index was up by 1.5 percent at 172.58 points while the STOXX euro zone bank index gained 2.1 percent.
"This will remove major uncertainties for the banks and the financing of the economy," said Arnaud Poutier, co-head of IG Markets France. "It's positive for banking stocks, but also for the overall market."
Brent crude oil futures slipped 50 cents to $110.81 per barrel after rising 0.6 percent last week.
ECB LOOMS
Investors were turning their attention to the first major policy meetings of the year at the European Central Bank and Bank of England on Thursday. No rate moves are expected but new euro zone economic forecasts are due.
Some analysts expect the ECB to point to the prospect of easier rates early this year after the meeting, contrasting with signals from U.S. Federal Reserve policymakers that it may pursue less accommodative policies in future.
The Bank of Japan is also expected to take major steps to stimulate that country's economy later this month as the new government aims to end deflation and recession.
The possibility of less monetary stimulus in 2013 from the Fed and more from the BOJ sent the dollar to a two-and-a-half year peak against the yen last week. However, profit taking saw it pull back on Monday by 0.3 percent to 87.87 yen.
The euro eased 0.3 percent to $1.3035 but was trading above a three-week low of $1.2998 hit on Friday. Analysts predicted it would stay around these levels until the outcome of ECB meeting is known.
"If the ECB doesn't cut rates we could see a minor uptick in the euro," said John Hardy, FX strategist at SAXO Bank. "The bigger risk going forward, however, is if they hint at the possibility of more easing, which will weigh on the euro."
DEBT STEADY
In the European bond markets, investors scooped up German government bonds after their steep falls last week as expectations changed over the Fed's next move.
Ten-year German cash yields were 2.2 basis points lower on the day at 1.522 percent. Other euro zone bond yields were steady to slightly higher as traders awaited debt auctions by Spain and Italy later in the week.
U.S. Treasury 10-year notes were mostly steady at 1.90 percent after reaching 1.975 percent on Friday in a sell-off fuelled by the expectations of less easy monetary policy this year.
Further moves are likely to be limited due to sales of three-year notes on Tuesday, 10-year notes on Wednesday and 30-year bonds on Thursday.
Gold was off its lows of last week but in line with equities and oil had eased slightly as investors focused on the outlook for U.S. budget talks and the Federal Reserve's quantitative easing programme.
"The current discussion in the gold market is when the Fed would end quantitative easing," said Peter Fertig, analyst with Quantitative Commodity Research.
Spot gold was down 0.1 percent at $1,655 an ounce, though above Friday's $1,625.79, its lowest price since August.

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