|
| 2nd Quarter, 2000
Alcoa's Earnings Up 57% From Year-Ago Quarter On a 38% Increase In Revenues
|
Second Quarter |
Six Months |
|
2000 |
1999 |
% change |
2000 |
1999 |
% change |
|
| Revenues |
$5,569 |
$4,033 |
38 |
$10,100 |
$8,017 |
26 |
| Net Income |
377 |
240 |
57 |
732 |
461 |
59 |
| Earnings per share |
.47 |
.32 |
47 |
.94 |
.62 |
52 |
| Avg common shares outstanding |
805 |
743 |
8 |
780 |
748 |
4 |
| (in millions, except per share amounts) |
PITTSBURGH, July 10, 2000 - Alcoa today reported net income of $377 million (47
cents per diluted share) for the second quarter of 2000 compared with net income
of $240 million (32 cents per share) for the 1999 second quarter. Earnings per
share were up 47%.
For the first half of 2000, net income was $732
million (94 cents per share) compared with $461 million (62 cents per share) for
the comparable 1999 period - a 59% increase in earnings and a 52% increase in
EPS.
"Earnings were up 6% from the first quarter, making the 2000 second
quarter Alcoa's eighth consecutive quarter of improved earnings," said Alain
Belda, Alcoa CEO. "Despite a 9% decline in LME aluminum prices in the second
quarter, higher energy costs and the temporary dilutive effect of acquisitions,
earnings continued to improve as a result of our focus on profitable growth and
the Alcoa Business System, as well as continued concentration on cost control."
Return on shareholders' equity for the 2000 first half, annualized, was
17% compared with 14.8% in the first half of 1999.
Revenues were $5.6
billion for the 2000 second quarter, compared with $4.0 billion in the year-ago
quarter. For the first half of 2000 revenues were $10.1 billion, compared with
$8.0 billion in the 1999 period.
Alcoa stated that, at the end of the
2000 second quarter, the company had achieved $884 million in annualized cost
savings towards its $1.1 billion target. Announced in mid-1998, this aggressive
target is to be achieved by January 1, 2001. The quarterly run rate at the end
of the quarter was $221 million, compared with $208 million for the 2000 first
quarter. Cost savings would have been higher for the second quarter, but
worldwide energy prices were up, particularly for gas and fuel oil. The company
remains confident that it will achieve its cost cutting goal.
Recent
Acquisitions
Alcoa noted that earnings for the second quarter 2000
included two months of operating results from Reynolds Metals Company and one
month of results from Cordant Technologies. Both acquisitions were completed in
the second quarter of 2000. Due to accounting requirements, results for the
quarter do not include earnings from those Reynolds assets (interests in three
alumina refineries and part of one smelter) that Alcoa agreed to sell under the
terms of the acquisition. While mildly dilutive at this time, Alcoa expects the
Reynolds and Cordant acquisitions to be accretive for the year. "As a result of
visiting and examining many Reynolds facilities over the past several months, we
have increased our target for cost saving synergies by 50%-- from $200 million
to $300 million-- to be achieved by mid-year 2002," said Mr. Belda. "Half of the
savings will be realized in the first 12 months. The near-term savings mainly
will come from consolidating purchasing worldwide and eliminating duplicate
public company activities. Longer-term savings will come from sharing best
practices and aligning processes and systems with the Alcoa Business System,
resulting in improved cycle time, less waste and reduced inventories. Our focus
is on the customer: providing what the customer wants, when it's needed."
Segments Revised
Following are Alcoa's reporting segments,
which have been revised to accommodate its new businesses:
» Alumina and
Chemicals - Primary activities include bauxite mining and alumina refining.
Alumina is sold to internal and external customers worldwide and is also
processed into industrial chemicals.
» Primary Metals - This is
Alcoa's worldwide smelting system. Alumina from the Alumina and Chemicals
segment is used to produce aluminum ingot which is used by a variety of Alcoa
fabricating segments as well as sold outside the company. Reynolds smelters have
been added to this segment.
» Flat-Rolled Products - The main
products here are aluminum sheet and plate. These products include rigid
container sheet (RCS) for aluminum beverage cans, sheet and plate for aerospace
applications, and mill products for a variety of industrial uses.
»
Engineered Products - Products in this segment include hard and soft alloy
extrusions - including architectural extrusion businesses - castings, fasteners,
forgings and wheels, primarily for aerospace, automotive and distribution
markets. The Huck and Howmet businesses acquired under the Cordant acquisition
are in this segment as well as Reynolds' wheels business.
»
Packaging and Consumer - This segment includes closures, packaging machinery,
PET bottle business in Latin America and Reynolds' packaging and consumer
businesses. (The Alcoa businesses here were formerly reported as "Other"
businesses.)
» Other Businesses - The operations listed here include
Alcoa Fujikura, which produces electrical components for the automotive
industry, and fiber optic cable and services for the telecommunications
industry; Thiokol, which produces rocket propulsion systems; and Alcoa
residential building products; and Reynolds' distribution businesses.
Sales and after tax operating income for each segment are available
via the Financial Report link below.
Founded in 1888, Alcoa is the
world's leading producer of aluminum and alumina, and a major participant in all
segments of the industry: mining, refining, smelting, fabricating and recycling.
Alcoa serves customers worldwide in the packaging, automotive, aerospace,
construction and other markets with a great variety of fabricated and finished
products. The company has over 300 operating locations in 36 countries.
Editorial Contact:
Bonita A. Cersosimo
1 412 553 4462
Investor Relations:
Charles D. McLane
1 412 553 2231
Alcoa (NYSE: AA)
Financial Report
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