Aluminum giant Alcoa Inc. (AA) announced that it has agreed to form a joint venture with Russias VSMPO-AVISMA Corporation, a leading maker of titanium ingots and forged products. Both Alcoa and VSMPO-AVISMA signed a cooperation agreement in Moscow to develop high end titanium and aluminum products for the aerospace industry.

The joint venture is expected to be operational in 2016 and once formed, will combine Alcoas expertise in manufacturing value-added products which utilize VSMPO-AVISMAs expertise in the production of titanium. Finished product manufactures will include high-end aerospace goods such as landing gear and forged wing components at Alcoas Samara plant.

Through the agreement, Alcoa will be able to increase its competitiveness and position its global aerospace business for continued profitable growth. VSMPO-AVISMA, on the other hand, will get access to unique forging equipment, enabling it to increase output and maintain consistent supply. The company can thereby increase its productivity and presence in the market.

Alcoa estimates that the aerospace market would grow 9%-10% in 2013 and with this joint venture in place both can work on their respective strengths in making the largest and most advanced aerospace forgings in the world.

A few days ago, Alcoa released its third quarter results. The company posted a profit of $24 million or 2 cents per share in the quarter compared with a loss of $143 million or 13 cents per share in the year-ago quarter. The results include restructuring and other one-time charges/gains of $96 million.

Excluding one-time special items, earnings were $120 million or 11 cents a share in the quarter, much ahead of the year-ago earnings of $76 million or 7 cents per share and Zacks Consensus Estimate of 6 cents. Productivity gains, strong demand from auto makers, healthy operating performance and cost cutting supported the results despite lower metal prices.

Revenues dropped roughly 1.2% to $5,765 million from $5,833 million in the year-ago quarter but exceeded the Zacks Consensus Estimate of $5,713 million. The decline was due to weak aluminum prices, offset by strong demand in the aerospace and automotive end markets. Alcoa reiterated its global aluminum demand growth expectation of 7% for 2013.

Alcoa, a prominent player in the mining industry along with Aluminum Corporation of China Ltd. (ACH), Atlatsa Resources Corp. (ATL) and BHP Billiton Ltd (BHP), is a world leader in production and management of primary aluminum, fabricated aluminum, and alumina. The company is also the worlds largest miner of bauxite and refiner of alumina.

Alcoa currently retains a short-term Zacks Rank #3 (Hold).

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Alcoa, VSMPO-AVISMA to Form Aerospace JV