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Alcoa - can anyone help with this tax situation
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i4value
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22-Jun-2023 14:43
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I found one simple explanation for this. The company had two segments - Domestic and Foreign. While the Foreign was profitable, the Domestic lost money thereby reducing the overall profits. But even though the Domestic had no taxes, when you calculate the overall tax rate you take to total tax divided by the total profits. The Domestic losses magnified the overall tax rate. For example, let us say that the profits/(loss) for the Foreign and Domestic was $ 600 and ($400) resulting in a total profit of $ 200 . And the taxes paid was $ 200 and zero. Then the overall tax rate = 200/200 = 100 %. While it seems like a arithmetic problem, the real question is when will the Domestic ops be profitable |
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i4value
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08-Jun-2023 13:31
Yells: "i4value.asia" |
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Alcoa is a US aluminum company with a global presense. Its business spans from bauxite mining, to smelting of alumina to production of alumiumun coils and extrusions. I found that while it was very proftiable before taxes, it sufferred losses after taking taxes into account. This is due to its high tax rates. Refer to the chart below. Can anyone provide an explation for this? I wrote to the Investors Relations dept for an explanation but have not received any response so far. I am a long-term fundamental investor. So I analyse and value companies. If you want to see other insights into other US companies, visit my US summary This is the first time I have come across such a tax situation. If you have either tax background, or some experience in the aluminum or mining sector, I would be interested to hear from you. |
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