(Source: Business Wire)
Alcoa (NYSE: AA) today announced third quarter 2009 income from
continuing operations of $73 million, or $0.07 per diluted share,
compared to a loss from continuing operations of $312 million, or $0.32
per share, in the second quarter 2009. Income from continuing operations
in the third quarter of 2008 was $306 million, or $0.37 per share.
Excluding restructuring and special items, income for the third quarter
2009 was $39 million, or $0.04 per share.
The third quarter of 2009 had net income of $77 million, or $0.08 per
share, compared with a net loss for the second quarter of 2009 of $454
million, or $0.47 per share. Net income in the third quarter of 2008 was
$268 million, or $0.33 per share. Discontinued operations for the third
quarter of 2009 had income of $4 million, or $0.01 per share. The second
quarter of 2009 had a loss of $142 million, or $0.15 per share.
Restructuring and special items in the quarter totaled $34 million, or
$0.03 per share. These items included a gain on the completion of a
transaction to acquire bauxite and alumina refining interests in
Suriname of $35 million and restructuring charges of $17 million before
tax ($1 million after tax and noncontrolling interests).
Revenues for the quarter were $4.6 billion compared with $4.2 billion in
the second quarter of 2009, a nine percent increase. Revenues were $7.0
billion in the third quarter of 2008. Sequentially, revenues were helped
by an increase in realized prices for primary aluminum to $1,972 per
metric ton from $1,667 per metric ton in the second quarter, as well as
stabilization in the end markets.
"The financial and operational measures we took in the first half of the
year are having a strong positive impact on our cash position and
profitability," said Klaus Kleinfeld, Alcoa President and Chief
Executive Officer. "Despite unfavorable currency and energy headwinds,
our performance this quarter indicates that Alcoa is weathering the
economic storm and is in excellent shape to benefit when the market
recovers."
The Company is exceeding all the targets of its Cash Sustainability
Program, which helped to offset negative currency and energy impacts in
the quarter of $89 million. Overhead savings are $375 million, 188
percent of the full year target for 2009, and procurement savings are
$1.61 billion, 107 percent of the full-year target. Reductions in
working capital have generated $780 million in cash, or 98 percent of
the 2009 target of $800 million.
Cash from operations in the quarter was $184 million compared with $328
million in the second quarter of 2009 as working capital reductions
continued, yet at a slower pace due to rising prices. Cash from
operations in the third quarter 2008 was a negative $93 million. EBITDA
in the quarter improved by $454 million from zero in the second quarter
of 2009.
During the quarter, the Company received the final $520 million of
proceeds from the exiting of the Shining Prospect venture and finished
the quarter with $1.1 billion of cash on hand. The Company's
debt-to-capital ratio stood at 38.3 percent at the end of the quarter, a
140 basis point reduction from the second quarter of 2009.
Capital expenditures in the quarter were $370 million, on-target to
reach the 2009 goal of a nearly 50 percent reduction from 2008. In the
quarter, the Company commissioned its Juruti bauxite mine in Brazil and
new lithographic sheet operations in Bohai, China. This follows the
opening of a new end and tab line in Russia in late-June. These
investments will lower costs and position the Company well for growth as
economies improve in those important markets.
Revenues for the first nine months of 2009 were $13.0 billion, compared
to $21.2 billion in the first nine months of 2008. Income from
continuing operations for the first nine months of 2009 showed a loss of
$719 million, or $0.78 per share, compared with income of $1.2 billion,
or $1.40 per share, in the first nine months of 2008. The nine months of
2009 showed a net loss of $874 million, or $0.95 per share, compared to
net income of $1.1 billion, or $1.35 per share, in the first nine months
of 2008.
In the second half of 2009, there are signs that key markets the Company
operates in are stabilizing. Due to low inventories at distributors and
rising shipments, regional premiums are improving and global aluminum
consumption is expected to increase 11 percent in the second half of
2009.
Segment Results
Alumina
After tax operating income (ATOI) was $65 million, a $72 million
improvement from the second quarter. Alumina production increased nine
percent or 305 thousand metric tons and average third-party realized
pricing improved 13 percent, helped by rising LME aluminum prices and
improved demand. A $58 million benefit from the Suriname acquisition was
partially offset by negative currency impacts of $28 million and higher
energy costs of $13 million. The Juruti mine was officially commissioned
this quarter and combined with the Sao Luis refining expansion, will
place Alcoa's overall refining system in the top quartile on the global
cost curve in terms of low-cost production.
Primary Metals
ATOI improved $170 million sequentially to a loss of $8 million due
primarily to improved pricing. Smelting production decreased 25 thousand
metric tons and third-party realized pricing was up $305 per metric ton,
or 18 percent, as LME pricing and regional premiums continued to
improve. Results were negatively impacted by $29 million of currency
effects. The production run rate now stands at 3.5 million metric tons
with approximately 20 percent of primary production curtailed.
Flat-Rolled Products
ATOI improved $45 million from the second quarter of 2009 through
improved orders and significant cost reduction efforts. Shipments for
the quarter increased six percent sequentially and revenue increased
seven percent. Every key end market except aerospace saw revenue gains,
including automotive which increased 21 percent from the second quarter
of 2009. Improved shipments and cost reduction efforts more than offset
the impacts of product mix and currency effects in Australia. This
quarter the Bohai flat-rolled products facility in China was inaugurated
and it is already serving customers in the printing, transportation,
electronics, and packaging industries.
Engineered Products and Solutions
ATOI for the quarter of $75 million was 15 percent below the sequential
quarter results driven by continued aerospace destocking, industrial gas
turbine market declines, and normal seasonal impacts. This was partially
mitigated by improved demand in commercial transportation and strong
results from spend reduction efforts.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
October 7, 2009 to present the quarter's results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com
under "Invest."
About Alcoa
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum, and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation, and industrial markets, bringing design,
engineering, production, and other capabilities of Alcoa's businesses to
customers. In addition to aluminum products and components, including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems, precision and investment
castings, and building systems. The Company has been named one of the
top most sustainable corporations in the world at the World Economic
Forum in Davos, Switzerland, and has been a member of the Dow Jones
Sustainability Index for seven consecutive years. Alcoa employs
approximately 63,000 people in 31 countries across the world. More
information can be found at www.alcoa.com.
Forward-Looking Statements
Certain statements in this release relate to future events and
expectations and, as such, constitute forward-looking statements
involving known and unknown risks and uncertainties that may cause
actual results, performance, or achievements of Alcoa to be different
from those expressed or implied in the forward-looking statements. Alcoa
disclaims any obligation to update publicly any forward-looking
statements, whether in response to new information, future events or
otherwise, except as required by applicable law. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include: (a) material adverse changes in
economic or aluminum industry conditions generally, including global
supply and demand conditions and fluctuations in London Metal
Exchange-based prices for primary aluminum, alumina, and other products;
(b) material adverse changes in the markets served by Alcoa, including
automotive and commercial transportation, aerospace, building and
construction, distribution, packaging, industrial gas turbine, and other
markets; (c) Alcoa's inability to mitigate impacts from energy supply
interruptions or from increased energy, transportation, and raw
materials costs or other cost inflation; (d) Alcoa's inability to
achieve the level of cash generation, return on capital improvement,
cost savings, or earnings or revenue growth anticipated by management in
connection with its restructuring, portfolio streamlining, and liquidity
strengthening actions; (e) Alcoa's inability to complete its growth
projects and portfolio streamlining projects or achieve efficiency
improvements at newly constructed or acquired facilities as planned and
by targeted completion dates; (f) unfavorable changes in laws,
governmental regulations or policies, foreign currency exchange rates or
competitive factors in the countries in which Alcoa operates; (g)
significant legal proceedings or investigations adverse to Alcoa,
including environmental, product liability, safety and health, and other
claims; and (h) the other risk factors summarized in Alcoa's Form 10-K
for the year ended December 31, 2008, Forms 10-Q for the quarters ended
March 31, 2009 and June 30, 2009, and other reports filed with the
Securities and Exchange Commission.
Alcoa and subsidiaries Statement of Consolidated Operations (unaudited) (a) (in millions, except per-share, share, and metric ton amounts)
Quarter ended
September 30, June 30, September 30,
2008 (b) 2009 2009
Sales $ 6,970 $ 4,244 $ 4,615
Cost of goods sold (exclusive of expenses below) 5,648 3,966 3,888
Selling, general administrative, and other expenses 275 240 234
Research and development expenses 61 38 39
Provision for depreciation, depletion, and amortization 311 317 342
Restructuring and other charges 38 82 17
Interest expense 96 115 120
Other expenses (income), net 15 (89 ) (123 )
Total costs and expenses 6,444 4,669 4,517
Income (loss) from continuing operations before income taxes 526 (425 ) 98
Provision (benefit) for income taxes 136 (108 ) (22 )
Income (loss) from continuing operations 390 (317 ) 120
(Loss) income from discontinued operations (38 ) (142 ) 4
Net income (loss) 352 (459 ) 124
Less: Net income (loss) attributable to noncontrolling interests 84 (5 ) 47
NET INCOME (LOSS) ATTRIBUTABLE TO ALCOA $ 268 $ (454 ) $ 77
Amounts attributable to Alcoa common shareholders:
Income (loss) from continuing operations $ 306 $ (312 ) $ 73
(Loss) income from discontinued operations (38 ) (142 ) 4
Net income (loss) $ 268 $ (454 ) $ 77
Earnings (loss) per share attributable to Alcoa common shareholders (c):
Basic:
Income (loss) from continuing operations $ 0.37 $ (0.32 ) $ 0.07
(Loss) income from discontinued operations (0.04 ) (0.15 ) 0.01
Net income (loss) $ 0.33 $ (0.47 ) $ 0.08
Diluted:
Income (loss) from continuing operations $ 0.37 $ (0.32 ) $ 0.07
(Loss) income from discontinued operations (0.04 ) (0.15 ) 0.01
Net income (loss) $ 0.33 $ (0.47 ) $ 0.08
Average number of shares used to compute:
Basic earnings per common share 807,570,516 974,279,655 974,353,242
Diluted earnings per common share 809,834,586 974,279,655 977,593,656
Shipments of aluminum products (metric tons) 1,342,000 1,288,000 1,230,000
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(a) On January 1, 2009, Alcoa adopted changes issued by the Financial Accounting Standards Board to consolidation accounting and reporting. These changes, among others, require that minority interests be renamed noncontrolling interests and that a company present a consolidated net income (loss) measure that includes the amount attributable to such noncontrolling interests for all periods presented.
(b) The Statement of Consolidated Operations for the quarter ended September 30, 2008 was reclassified to reflect the movement of the Electrical and Electronic Solutions business to discontinued operations in the fourth quarter of 2008.