Alcoa (NYSE:AA) reported fourth-quarter 2025 results marked by higher revenue and a sharp sequential improvement in adjusted EBITDA, driven primarily by stronger aluminum prices and premiums. Management also pointed to record annual production at multiple assets, progress on the San Ciprián smelter restart, and continued work on strategic initiatives including remediation-site monetization and Western Australia mine approvals.
Operational performance and safety
CEO William Oplinger opened the call emphasizing safety and operational stability. He said safety incident rates were stable in the fourth quarter, with fewer significant incidents in the second half of 2025. For the full year, Alcoa’s DART and all injuries rates improved versus 2024.
On San Ciprián, Oplinger said the restart was progressing well, with about 65% of capacity in operation at the end of 2025, and reiterated expectations that the restart will be completed in the first half of 2026.
Quarterly financial results and notable items
CFO Molly Beerman said revenue rose 15% sequentially to $3.4 billion. Alumina segment third-party revenue increased 3% as higher bauxite and alumina shipments more than offset lower alumina prices. Aluminum segment third-party revenue increased 21% on a higher average realized third-party price and higher shipments.
Net income attributable to Alcoa was $226 million versus $232 million in the prior quarter, with earnings per share of $0.85. On an adjusted basis, net income was $335 million, or $1.26 per share, excluding net special items of $109 million. Adjusted EBITDA totaled $546 million, up $276 million sequentially.
Beerman walked through several notable GAAP items:
- R&D expense impact: R&D expenses were negative $11 million in the quarter. Beerman said Norway’s CO2 compensation scheme now requires recipients to spend 40% of compensation on emissions reduction and energy efficiency measures; Alcoa met requirements and recognized $25 million as a reduction of related R&D expenses. She said these EBITDA impacts will not recur in the first quarter of 2026.
- Goodwill impairment: A non-cash charge of $144 million was recorded to impair goodwill in the alumina segment, primarily related to a 1994 acquisition. Beerman said current alumina prices did not support the valuation and that no goodwill remains after the charge; it was treated as a special item.
- Interest expense: Interest expense was lower due to a $23 million benefit from recognition of capitalized interest on certain capital expenditures from prior periods.
- Tax benefit: The company recorded a $133 million tax benefit from reversing a valuation allowance on deferred tax assets in Brazil, mainly due to improved profitability at the Alumar refinery. Beerman said discrete tax items are consistently reflected as special items.
Adjusted EBITDA drivers included higher metal prices (including both the LME and Midwest premium). Alumina segment adjusted EBITDA declined $36 million due mainly to lower alumina prices, partially offset by higher shipping volumes and the non-recurrence of asset retirement obligation adjustments recorded in the third quarter. Aluminum segment adjusted EBITDA rose $213 million on higher metal prices, lower alumina costs, and recognition of CO2 compensation in Spain and Norway, partially offset by higher tariff costs tied to higher LME prices and higher production costs.
Cash flow, balance sheet, and capital allocation
Beerman said Alcoa ended December with $1.6 billion in cash. In the fourth quarter, improved earnings and a working capital release supported repayment of the remaining $141 million of 2027 notes and higher capital expenditures. Free cash flow for full-year 2025 was $594 million, including $294 million in the fourth quarter. She attributed a significant portion of fourth-quarter free cash flow to lower working capital, with days working capital down 15 days sequentially to a level similar to the fourth quarter of 2024.
Return on equity for 2025 was 16.4%, which Beerman said was the highest since 2022. During the year, the company returned $105 million to stockholders through its $0.10 per share quarterly dividend.
Alcoa finished 2025 with $1.5 billion of adjusted net debt, at the high end of its $1.0 billion to $1.5 billion target range. Beerman emphasized the company’s goal is to remain within that range through cycles, noting Alcoa has historically consumed cash in the first quarter due to working capital increases. She said the company expects to be mindful of cash in the first quarter of 2026 while executing its capital allocation framework, prioritizing debt repayment and evaluating opportunities to create additional value for stockholders.
2026 outlook and first-quarter considerations
For full-year 2026, Alcoa guided to alumina production of 9.7 to 9.9 million tons and shipments of 11.8 to 12.0 million tons, with the lower shipment outlook reflecting reduced sales of externally sourced alumina to meet certain customer commitments and lower trading volumes.
For aluminum, production is expected to be 2.4 to 2.6 million tons and shipments 2.6 to 2.8 million tons, increasing primarily due to the San Ciprián restart.
Beerman said items outside the segments are expected to include transformation costs of $100 million (up mainly due to Kwinana holding costs for a full year) and other corporate expense of approximately $160 million. Below EBITDA, the company expects depreciation of about $630 million, non-operating pension and OPEB expense of about $35 million, and interest expense of approximately $140 million.
Capital expenditures are projected at $750 million, including $675 million sustaining and $75 million return-seeking. Beerman said the sustaining capital increase versus 2025 is driven mainly by upcoming mine moves in Australia and higher spend on impoundments and anode bake furnace rebuilds. Environmental and ARO spending is expected to rise to about $325 million, primarily due to progress on Kwinana site remediation. Net payments on prior-year income taxes are expected to be about $230 million, including an estimate for Ma’aden capital gains tax; Beerman said Alcoa expects that tax payment in the first quarter of 2026, as the final invoice has not yet been received.
For the first quarter of 2026, Alcoa expects segment-level headwinds: alumina performance unfavorable by about $30 million due to maintenance cycle impacts and lower shipping volumes, and aluminum unfavorable by about $70 million due to the non-recurrence of Spain and Norway CO2 compensation credits recorded in the fourth quarter and additional operating costs associated with the San Ciprián restart. On the call, management specified that roughly $50 million of that $70 million relates to the CO2 compensation not repeating, with about $20 million related to San Ciprián. Alumina cost in the aluminum segment is expected to be favorable by about $40 million.
Market commentary and strategic initiatives
Oplinger described alumina pricing as range-bound and slightly lower than the third-quarter average, continuing to pressure higher-cost refineries. He said no large-scale curtailments have been announced, citing China’s emphasis on orderly industry operation and stable production through contract negotiations, while noting current pricing pressures roughly 60% of China refineries. He also cited potential incremental supply from expansion projects in China, Indonesia, and India, while suggesting anticipated smelting capacity growth—primarily in Indonesia—could support demand in the second half of 2026.
In bauxite, Oplinger said prices were stable in the fourth quarter amid limited spot activity, but noted lower prices early in the year as supplies increase in Guinea with restarted capacity from previously suspended licenses.
On aluminum, Oplinger said LME prices increased 8% sequentially in the fourth quarter and had recently reached $3,200 per metric ton. He cited constrained supply, demand projections, broader base metals strength, and increased fund positioning. He said year-end inventories in days of consumption fell to their lowest year-end level in at least 15 years. He also discussed regional demand trends, including strength in packaging and electrical sectors, and outlined softer conditions in certain European automotive and construction-related segments.
Oplinger said higher regional premiums benefited the company, and he noted that the higher Midwest premium “fully offset” tariff costs on shipments from Canada to the U.S. He also discussed Europe’s carbon border adjustment mechanism (CBAM), which is set to begin in January 2026, and said Alcoa expects a net benefit in 2026 because anticipated increases in the Rotterdam premium should more than offset incremental carbon emissions costs. He cited an internal estimate of roughly $10 per metric ton net positive impact in 2026, while noting the company will reconfirm as dynamics materialize.
On strategic initiatives, management said negotiations are progressing to monetize a remediation site in the U.S., with an agreement expected in the first half of 2026. Beerman added the primary negotiation is taking longer because it is not a simple land sale and could involve a multi-year payment stream and value-sharing structures. She also said the company has 10 priority sites to meet a target of $500 million to $1 billion over the next five years.
Oplinger also highlighted ELYSIS’ successful startup of a 450 kA inert anode cell as a milestone and said Alcoa would not implement ELYSIS technology before 2030, describing any potential groundbreaking as post-2030. On Western Australia mine approvals, he said Alcoa received close to 60,000 comments during the public comment period, responded to them, and still expects an EPA recommendation by the end of the first half and ministerial approvals by year-end 2026.
In Q&A, management said the Alumar smelter experienced another setback in the fourth quarter related to power interruptions and expects first-quarter production to be similar to the fourth quarter, while noting the smelter reached profitability in the second half of 2025. On San Ciprián, management said it expects to reach smelter profitability after completing the restart, still targeted for mid-2026, while providing 2026 guidance for the combined complex of an EBITDA loss of approximately $75 million to $100 million, with most of the loss attributable to the refinery.
About Alcoa (NYSE:AA)
Alcoa Corporation is a global industry leader in the production and management of aluminum, offering an integrated value chain that spans bauxite mining, alumina refining, primary aluminum smelting and the fabrication of value-added products. The company’s operations are organized into segments that include raw material extraction, chemical processing and the manufacture of metal mill products and engineered solutions.
Alcoa’s product portfolio serves diverse end markets such as aerospace, automotive, packaging, construction, electrical and industrial applications.
