Alcoa reported a stronger-than-expected increase in third-quarter profit as higher aluminum prices and lower costs drove a recovery in its business unit that produces aluminum.

In the third quarter, the US company's net income rose to $149 million, or 12 cents a share, from $24 million, or 2 cents, even as it took restructuring charges for smelter closures.

Alcoa chief executive Klaus Kleinfeld said the "upstream" raw materials business had its best quarter since the 2008 economic slump. "Our performance this time is more great proof that our strategy is working," he said.

The aluminum company traditionally has been one of the first S&P 500 companies to report quarterly results, and some see it as a bellwether for the broader US economy because it supplies major industries such as auto and airplane manufacturing.

Alcoa's stock rose 2 per cent in after-hours trading to $16.42. It is up 50 per cent this year, outperforming the market and aluminum prices.

Alcoa's growing business making specialised goods for automotive and aerospace customers has helped offset a weak market for less-processed aluminum. The company has also been working to improve costs.

Third-quarter after-tax operating income in Alcoa's primary metals unit, which houses its aluminum mining, refining and smelting operations, jumped to $245 million from $8 million. It also benefited from an increase in average realised prices to $2,538 a tonne from $2,180.

Alcoa has been shutting higher-cost smelting capacity as its joint venture with Saudi Arabian Mining expands. Kleinfeld said the Saudi operation is fully ramped up and already profitable.

Asked if Alcoa would close more smelting capacity, Kleinfeld said the company was still targeting lower costs: "We are not done yet," he said.

Excluding special items, Alcoa's earnings jumped to $370 million, or 31 cents a share, in the third quarter, exceeding the 23 cents a share that analysts on average were expecting. Sales rose to 7 per cent to $6.2 billion.

After a steep drop, aluminum prices surged 27 per cent in the seven months through August to a 18-month peak. They have since given up some gains but are up about 8 per cent on the year. - Reuters