Aerospace is key market for Alcoa's engineered products division–Jarrault
November 7, 2012
By:  Andrea Hotter

Aerospace has the best growth profile of the markets served by Alcoa's engineered products and solutions division, a senior company executive told investors at a briefing in New York.

Divisional head Olivier Jarrault said global aerospace sales are projected to have risen by 13-14% this year from 2011 levels, largely due to growth in demand for large commercial aircraft.

Aerospace will account for 51% of the division's revenue this year, he said, and has a "vibrant" growth profile projected over the long and near-term.

Orders and deliveries are strong, with a backlog of orders of eight years, based on 2011 production levels, he told investors.

"This growth is being driven by increased travel demand and an ageing fleet," Jarrault added.

Around 34,000 new planes are required by 2031, and there's an average build rate of 1,700 aircraft a year.

He described other core markets as "a mixed bag", however.

Heavy truck and trailers production is rising in North America, but declining in Europe and China, leading to an overall decline in output of 7-9%.

Non-residential construction sales are down in North America and Europe, Jarrault said, but up in China, leading to projected sales growth of 2.5-3.5%.

The industrial gas turbine sector is estimated to see global growth of 3-5% this year from 2011 levels, he added.

Alcoa is targeting $1.6 billion of organic revenue growth in its engineered products division from 2010 levels by 2013.

This includes $600 million from growth in markets it serves and $1 billion from market share gains and innovation, Jarrault said.

Revenues for the division in 2010 were $4.6 billion.

Expansions in China, Brazil and India are planned, with the division driving year-on-year working capital improvements, Jarrault said.