Alcoa 2Q16 Earnings Call Notes

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Klaus Kleinfeld – Chairman and CEO

Opened 3D printing production facility

“d we also opened the state-of-the-art, 3D printing metals powder production facility geared towards making metals for 3D printing, mainly for titanium, nickel and aluminum alloys powders in the aerospace world.”

The commercial aerospace market is clearly in a transition year

“2016 in the aerospace market is clearly a transition year, and we have been seeing some of those actually today and the announcements from Farnborough, clearly a world of two different halves. And the first half, if you look at large commercial aircraft deliveries, they have been down by 1%. At the same time, if you calculate the full year, we believe that it’s going to be flat to plus 1%. And we do see that there is now a very careful ramp-up of new models increasing [ph] problems we’ve particularly seen on some of the new technology and more on the jet engine side have been solved, and the orders are coming in. However, the lower orders are there for legacy models. But we do have — we have seen particularly on the jet engine side, strong June deliveries, second best month on record. And we do believe that the second half is going to show a growth of 6% versus the first half. We do also believe that given this transition that demand is going to move over or has moved over until 2017”

Aluminization of automotive market continues

“So, let’s also take a quick look onto the automotive market. And with this, let me be very clear, the aluminization, as I call it of North American auto platform, continues”

A very different year for aerospace because of innovation

“This is a very, very different and a bit odd year because of the enormous amount of innovation that’s going on. And the innovation actually is the foundation why there is such a strong demand. I mean when you see the new jet engines getting 15% — on average, 15% of efficiency improvement, that’s something.”

William Oplinger

Chinese demand growth driven by stimulus in property markets

“Let me discuss China briefly. 2016 Chinese demand growth of 6.5% is driven largely by Chinese government stimulus in the property markets. However, we have also seen improved electrical end use and strong demand in the transport and packaging sectors. On the supply side, China is increasing by roughly 3% but it’s important to know that China’s net supply growth rate is the lowest it has been since the global financial crisis.”