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January 8, 1999

Rapid Growth, Successful Cost Cutting Keep Alcoa Earnings Strong

PITTSBURGH--January 8, 1999-- Alcoa (NYSE:AA) today announced 1998 fourth quarter net income of $218.3 million, or $1.19 per common share, on revenues of $4.2 billion.

For the full year 1998, Alcoa's net income was $853.0 million, or $4.87 per share, on record revenues of $15.3 billion.

"1998 was a year of exceptional performance for Alcoa," said Chairman and CEO Paul O'Neill. "The growth we achieved and the rapid integration of Inespal and Alumax into Alcoa, as well as our successful focus on cost reductions, helped the company overcome a 20% decline in aluminum prices since the beginning of the year. We will rely on our own internal actions - not outside forces - to achieve our goals in 1999."

Net income for the 1998 fourth quarter was up 23% from the comparable 1997 period, excluding special items. The 1997 quarter included a special after-tax gain of $32.7 million ($72.9 million pretax) or 19 cents per share, from the sale of a majority interest in Alcoa's Brazilian cable business and a land sale in Japan. Excluding the one-time gain, 1997 fourth quarter earnings were $177.6 million, or $1.04 per share.

For the 1998 fourth quarter, net income included after-tax losses of $0.9 million as a result of marking to market certain aluminum commodity contracts, compared with after-tax losses of $11.7 million, or 7 cents per share, for these contracts for the comparable 1997 quarter.

Earnings for the full year 1998 were up 12% from 1997, excluding special items. The 1997 year also included a net gain of $43.9 million ($95.5 million pretax), or 25 cents per share, related to the sale of various assets, partially offset by increases to environmental reserves. Excluding these gains and charges, the company earned $761.2 million, or $4.41 per share, for all of 1997.

Results for the full year 1998 included net after-tax losses of $44.5 million, or 25 cents per share, for the above-mentioned aluminum commodity contracts. For the 1997 full year, these losses were $12.7 million, or 7 cents per share.

Shipments of aluminum products during the 1998 fourth quarter were 1,174,000 metric tons (mt) compared with 734,000 mt in the year ago quarter. For all of 1998, shipments were a record 3,951,000 mt compared with 2,956,000 mt in 1997.

Excluding one-time items, return on shareholders' equity was 16.3% for 1998 and 17.1% for 1997.

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 250 operating locations in 30 countries.

Financial and operating data for Alcoa and its subsidiaries follow.