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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
Financial and operating data for Alcoa and its subsidiaries follow.