Alcoa AA logged forecast-topping earnings in the first quarter of 2016, but lower aluminum prices weighed on its sales that fell by double digits and came below expectations.The New York-based aluminum giant saw its profits slump on a reported basis in the quarter as lower metals prices and charges related restructuring dragged down its bottom line. Alcoa’s realized aluminum prices tumbled around 26% in the quarter. Aluminum prices remain under pressure given the oversupply of the metal in the market and weak demand in China.Alcoa recorded profit, as reported, of $16 million (or break even per share) for the reported quarter, a 92% plunge from $195 million or 14 cents per share in the year-ago quarter. The results in the reported quarter include restructuring charges of $63 million.Barring one-time items including restructuring charges, earnings were 7 cents per share, down from 28 cents per share recorded a year ago. Earnings, however, topped the Zacks Consensus Estimate of 2 cents. Headwinds from lower metal prices continued to more than offset gains from productivity actions. The company recorded productivity gains of $364 million in the quarter.Revenues slipped roughly 15% year over year to $4,947 million in the first quarter as organic growth and gains from acquisitions was more than offset by lower prices of aluminum and alumina, unfavorable currency impact and divestment & closure of businesses. Revenues missed the Zacks Consensus Estimate of $5,274 million.Alcoa trimmed its global aluminum demand growth forecast for 2016 as well as its outlook for the key aerospace end-market. The company also noted that it could cut as much as 2,000 jobs to strengthen its cost structure.The company’s shares went down roughly 4.5% in extended trading yesterday. Alcoa's shares are down roughly 25% over a year as lower prices continue to hurt its legacy smelting and refining business. Alcoa Inc. (AA) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany Segment ReviewEngineered Products and Solutions (“EPS”) – Revenues from the division climbed 15% year over year to roughly $1.4 billion in the first quarter on the back of acquisitions. After-tax operating income (ATOI) rose 4% year over year to $162 million as contributions from RTI acquisition and productivity gains were partly offset by unfavorable pricing and mix and higher costs. Transportation and Construction Solutions (“TCS”) – The segment’s sales fell 9% year over year to $429 million. ATOI rose 3% year over year to $39 million on productivity gains.Global Rolled Products (“GRP”) – Sales fell around 14% year over year to $1.4 billion. ATOI climbed 26% year over year to $68 million on gains from productivity and higher automotive shipments. Alumina – Revenues tumbled around 39% year over year to $545 million in the quarter. Production fell around 15% year over year to 3.3 million metric tons. Shipments also went down roughly 15% to 2.2 million metric tons. ATOI slid roughly 96% year over year to $8 million.Primary Metals – Sales skid around 29% year over year to $1.1 billion. Shipments fell 2% to 0.6 million metric tons. Production was roughly 0.7 million metric tons, an around 8% decline from the prior-year quarter. ATOI tumbled around 93% year over year to $14 million, hit by lower aluminum prices.Financial PositionAlcoa ended the quarter with cash and cash equivalents of $1,384 million, up around 16% year over year. Total long-term debt was $9,029 million, up 3% year over year. Cash used for operations was $430 million in the reported quarter, resulting in negative free cash flows of $681 million.Portfolio Transformation & Strategic ActionsAlcoa, in Sep 2015, said that it is splitting into two independent, publicly-traded companies. The separation will result in the creation of two standalone entities – The Upstream Company and The Value-Add Company. The transaction is expected to close in second-half 2016. The separation will mark the completion of Alcoa’s multi-year transformation.The Value-Add Company will be named “Arconic" while the Upstream Company will operate under the "Alcoa" moniker. Post separation, the Arconic company will include GRP, EPS and TCS business segments (combined sales of $3.3 billion in the first quarter). These segments are expected to deliver $650 million in productivity savings in 2016.The new Alcoa (Upstream) company will consist of bauxite, alumina, aluminum, casting and energy business units. These businesses reported combined revenues of $2.1 billion in the first quarter and are expected to deliver $550 million in productivity savings in 2016.Alcoa is actively pursuing its aerospace expansion strategy and has already secured roughly $10 billion in aerospace contracts since the beginning of 2015.The company, in Jan 2016, inked a long-term agreement with Boeing BA to supply multi-material aerospace parts, marking its fourth multi-year contract with the aerospace giant in a series of recent deals. The contract follows Alcoa’s two multi-year aerospace deals (worth more than $2.5 billion) with Boeing, inked in Dec 2015. Alcoa, in Sep 2014, also signed an aluminum sheet and plate deal with Boeing worth more than $1 billion.Alcoa has also secured big aerospace deals with Airbus and Lockheed Martin LMT. The company cut a $1 billion deal with Airbus in Oct 2015 to supply the latter titanium, steel and nickel-based superalloy aerospace fastening systems. Alcoa also inked an agreement with Airbus to supply 3D-printed metal parts for Airbus commercial aircraft. Moreover, the company has won a contract worth roughly $1.1 billion to supply titanium for Lockheed Martin’s F-35 Joint Strike Fighter (“JSF”) program.In addition, Alcoa is making a notable progress with its breakthrough Micromill technology and rolling mill investments to meet rising demand for aluminum intensive vehicles. Alcoa has inked a joint development agreement with Ford F to make next-generation aluminum alloys for automotive parts using the Micromill technology.Alcoa is also taking a number of steps (ncluding workforce reduction) to improve its cost structure. The company said that the EPS division cut its workforce by 600 positions in the first quarter and intends to further trim 400 positions. The unit is also evaluating additional cuts of up to 1,000 positions considering the prevailing difficult market environment.The company is also divesting businesses to optimize portfolio and strengthen its balance sheet. As part of this move, Alcoa Australia has sold its 20% stake in DBP, the owner and operator of the Dampier to Bunbury Natural Gas Pipeline (“DBNGP”), to Duet Group for around $154 million.Alcoa also remains on track to move down the cost curve through capacity curtailments. As part of this move, the company shuttered its Warrick Operations smelter in Indiana in March and also curtailed 1.2 million metric tons of refining capacity at its Point Comfort operations in Texas in the first quarter.OutlookAlcoa has cut its 2016 global aerospace sales growth forecast to 6%-8% from 8%-9% expected earlier. The company continues to see global automotive production growth of 1%-4% for 2016 including 1%-5% growth in North America.For the heavy duty truck and trailer market, the company now expects global production of -4% to flat (a downward revision from -3% to 1% expected earlier) reflecting weakness in North America. The company expects 4%-6% global sales growth in the building and construction market. For the packaging market, Alcoa continues to expect global sales growth of 1% to 3% this year. For the global airfoil market, Alcoa sees a 2% to 4% growth in 2016.Moreover, Alcoa now expects a global aluminum deficit of 1.1 million metric ton (down from prior view of 1.2 million metric tons) and a global alumina deficit of 1.4 million metric tons (down from 2.8 million metric tons) this year. The company has also reduced its global aluminum demand growth forecast to 5% from 6% expected earlier. Global demand for aluminum is expected to grow faster than supply in 2016.Alcoa currently carries a Zacks Rank #3 (Hold).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BOEING CO (BA): Free Stock Analysis Report LOCKHEED MARTIN (LMT): Free Stock Analysis Report FORD MOTOR CO (F): Free Stock Analysis Report ALCOA INC (AA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research