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October 4, 2007
Alcoa Updates on Portfolio Review
NEW YORK--Following the recent monetization of its stake in Aluminum Corporation
of China Limited (Chalco), Alcoa (NYSE:AA) today announced a series of
portfolio decisions that will further enhance its capital structure and
provide additional opportunities to improve shareholder value.
After completing the strategic review of its portfolio, the Company
intends to proceed with the sale of its Packaging and Consumer business.
The company has received strong indications from strategic buyers for
that business, and plans to complete the transaction by late 2007 or
early 2008. The company is also near a definitive agreement to sell its
Automotive Castings business and should close that transaction by the
end of the year.
In addition, the company plans to significantly restructure its
Electrical and Electronic Solutions (formerly the Alcoa Fujikura Limited
wireharness business) business in the Americas and Europe to improve
returns and profitability.
These portfolio actions will be carried out in consultation with the
unions and works councils as required by applicable U.S., European and
local rules and regulations
As a result Alcoa expects to record after-tax restructuring and
impairment charges in the third quarter of 2007 of approximately $195
million related to the Electrical and Electronic Solutions business;
approximately $50 million for charges related to the automotive castings
business; and approximately $600 million related to the planned sale of
the packaging and consumer business, the majority of which is associated
with income taxes.
These portfolio actions, combined with the sale of Alcoa’s
stake in Chalco, will significantly enhance the company’s
capital structure and add flexibility for both growth opportunities and
other initiatives to improve shareholder value.
The precise impact on the third quarter’s
results of the restructuring and impairment charges, along with the gain
on the sale of the Chalco shares, will be detailed in the company’s
earnings release and conference calls next Tuesday, October 9, 2007.
Alcoa is the world's leading producer and manager of primary aluminum,
fabricated aluminum and alumina facilities, and is active 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, structures
and building systems. The company has 116,000 employees in 44 countries
and has been named one of the top most sustainable corporations in the
world at the World Economic Forum in Davos, Switzerland. More
information can be found at www.alcoa.com.
Certain statements in this release relate to future events and
expectations, and as such constitute forward-looking statements
involving known and unknown risks, uncertainties and other factors 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 intention or obligation, other than as
required by law, to update or revise any forward-looking statements.
Important factors that could cause actual results to differ materially
from those in the forward-looking statements include: (a) material
adverse changes in global economic or aluminum industry conditions
generally, including global supply and demand conditions and
fluctuations in London Metal Exchange-based prices for primary aluminum
and other products; (b) material adverse changes in the markets served
by Alcoa, including the packaging, transportation, distribution,
building and construction, aerospace, industrial gas turbine and other
markets; (c) Alcoa’s inability to implement
successfully its strategy for growth or its productivity, cost-reduction
or capital structure enhancement initiatives; (d) Alcoa’s
inability to realize the full extent of the expected savings or benefits
from its restructuring activities, to complete such activities in
accordance with its planned timetable, or to assure that subsequent
developments do not cause the actual charges to exceed the estimated
charges; (e) changes in laws, governmental regulations or policies,
currency exchange rates or competitive factors in the countries in which
Alcoa operates; (f) significant legal proceedings or investigations
adverse to Alcoa; and (g) the other risk factors summarized in Alcoa's
Form 10-K for the year ended December 31, 2006, Forms 10-Q for the
quarters ended March 31, 2007 and June 30, 2007, and other reports filed
with the Securities and Exchange Commission.