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Arconic faces proxy fight from largest shareholder

February 1, 2017

NEW YORK (AP) — Arconic Inc. faces a proxy fight from its largest shareholder, who accuses the maker of lightweight engineered products for aerospace and autos of underperforming.

Elliott Management said Tuesday that it has nominated five candidates for the board of the company that separated from Alcoa and which is led by former Alcoa CEO Klaus Kleinfeld. The hedge fund and activist shareholder said Arconic needs new leadership to boost its stock price.

New York-based Arconic has 13 members on its board, including Kleinfeld.

Elliott said it hired Larry Lawson, the former CEO of aircraft-parts maker Spirit AeroSystems Inc., as a consultant, and assembled a director slate of former executives from defense and metals companies. Elliott said it owns 10.5 percent of Arconic shares.

Arconic’s board issued a statement expressing its support for Kleinfeld. It called Elliott’s efforts “disruptive and contrary to the best interests of all shareholders.”

Since the Nov. 1 split, shares of Alcoa, which kept the traditional aluminum mining and smelting business, have risen about 65 percent while Arconic’s shares have gained only about 2 percent.

In its first quarterly report as a new company, Arconic posted a loss of $1.25 billion, or $2.88 per share, for the fourth quarter. Excluding costs from its separation from Alcoa and other restructuring costs, the company said it would have earned 12 cents per share.

That was roughly in line with Wall Street expectations. The mean forecast of six analysts surveyed by FactSet was 13 cents per share, while the average of three surveyed by Zacks Investment Research was 11 cents per share.

Revenue was $2.99 billion.

For the first quarter of this year, the company expects revenue of between $2.8 billion and $3 billion, compared with a FactSet forecast of $2.98 billion. For all of 2017, the company expects adjusted profit of $1.10 to $1.20 per share, higher than analysts’ prediction of $1.03. Arconic forecast revenue between $11.8 billion and $12.4 billion, compared with analysts’ forecast of $12.16 billion.

Arconic shares were up 26 cents, or 1.1 percent, to $23.05 in extended trading following the release of the earnings report.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on ARNC at https://www.zacks.com/ap/ARNC

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Keywords: Arconic, Earnings Report

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This story has been corrected to show that in the fourth quarter Arconic lost $1.25 billion, not $701 million, and lost $2.88 per share, not $1.64 a share. Adjusted earnings were 12 cents a share, not 3 cents a share. The results beat, not missed, Wall Street expectations.

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