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July 7, 1998

Strong Earnings Continue Despite Lower Metal Prices

PITTSBURGH--July 7, 1998-- Alcoa today announced net income of $207.1 million, or $1.24 per common share, for the second quarter of 1998, compared with net income of $207.6 million, or $1.19 per share, in the 1997 second quarter.

For the first half of 1998, net income was $417.0 million, or $2.49 per common share, up 14% from $366.7 million, or $2.11 per share, for the comparable 1997 period.

"We are very pleased with our earnings performance for the first half of the year since we have been able to more than offset a 16% drop in aluminum prices on the LME since the beginning of 1998," said Paul O'Neill, chairman and chief executive officer. "We look forward to the addition of Alumax in the next quarter and have been hard at work with Alumax employees to make the acquisition very beneficial to Alcoa customers and shareholders."

Return on shareholders' equity for the 1998 first half, annualized, was 18.3%, compared with 15.7% in the first half of 1997.

Second quarter 1998 revenues were $3.6 billion compared with $3.4 billion in the 1997 second quarter. Year-to-date, 1998 revenues were $7.0 billion compared with $6.7 billion for the 1997 first half.

Aluminum shipments rose to a record 866,000 metric tons (mt) for the 1998 second quarter on the strength of the company's European businesses, compared with 760,000 mt in the year-ago quarter. Shipments of 1,644,000 mt for the first half of 1998, also a record, were up 11% from 1, 480,000 mt in the 1997 period.

Second quarter 1998 earnings were $228 million before after-tax losses of $21.1 million, or 13 cents per share, as a result of marking to market certain aluminum commodity contracts. Of these losses, $16.5 million, or 10 cents per share, is related to fabricated product sales contracts that will be shipped in future quarters. For the comparable 1997 quarter, after-tax losses resulting from marking to market these contracts were $7.1 million, or four cents per share.

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 187 operating locations in 28 countries.

Editor's Note: Alcoa acquired approximately 51% of Alumax on June 17, 1998. Alcoa's share of Alumax's results for the 13-day period are not included.

Financial and operating data for Alcoa and its subsidiaries follow.