Alcoa (NYSE:AA) recently announced its plans to restructure its midstream flat rolled products division from the current regional structure to a market/product based structure in order to increase its focus on emerging markets. [1] Alcoa is the world leader in the production and management of primary aluminum, fabricated aluminum and alumina, competing with other Aluminum giants like Rusal, Rio Tinto (NYSE:RIO), BHP Billiton (NYSE:BHP) and Chalco (NYSE:ACH).

Gearing up for Growth

For aluminum manufacturers like Alcoa, emerging markets hold immense value as these are the regions that will drive the company’s sales going forward. In order to focus more on these markets, the company now plans to restructure its midstream flat-rolled products’ business in to a more market-driven structure in which the emerging markets will be more closely tied with the company’s global production and distribution facilities. Going forward the flat rolled business will be divided into five major divisions based upon the different industries - Aerospace, Ground Transportation, Packaging, Consumer Electronics and Defense. These divisions will fall under a primary group – Alcoa Global Rolled Products, which will have a special emphasis on growth in emerging markets.

Bullish on Aluminum

Aluminum demand is on the rise, primarily driven by the increased usage in the Automotive and Aerospace industries globally as manufacturers push to make lighter, more fuel efficient vehicles. Aluminum is also witnessing huge demand from its usage in electronics and household items. Alcoa maintains its outlook of close to 12 percent growth in aluminum demand in 2011 and is of the view that demand will double from 2010 consumption by 2020. Shifting to a global, market-driven structure will help the company leverage the regional capabilities and deploy them at a global scale for increased competitiveness and efficiency.

We believe that Alcoa’s stock has significant upside as the company has tremendous growth potential going forward. Last week, we also covered the company in two separate notes that describe how the demand for lightweight automobiles will boost the company’s Aluminum Business and the company’s Chinese joint venture to develop high end aluminum products for use in aerospace, automobiles and consumer electronics.