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January 8, 1998

Record Revenues and Shipments, Improved Cost Performance Drive Alcoa's Results for 1997

PITTSBURGH--January 8, 1998-- Alcoa today announced 1997 fourth quarter net income of $210.3 million, or $1.23 per common share, on revenues of $3.3 billion. For the comparable 1996 quarter, net income was $136.1 million, or 78 cents per share, with revenues of $3.3 billion.

For all of 1997, Alcoa's net income was $805.1 million, or $4.66 per share, compared with $514.9 million, or $2.94 per share, for the 1996 year. Revenues for the 1997 year were a record $13.3 billion, compared with $13.1 billion for 1996.

"I am pleased with our performance in 1997," said Paul O'Neill, Chairman and CEO. "Due to our relatively small exposure to Asian markets, the financial problems there have not had an impact on our earnings. The 1997 year was one of continued worldwide growth for Alcoa. Increased demand for our products, coupled with relentless improvements in operating efficiencies, more than offset lower fabricated aluminum prices," continued Mr. O'Neill. "We have accelerated our efforts to be the provider of choice in every region of the world, which is playing a part in reaching our year 2000 goal to have $20 billion in revenues. We intend to continue to be so good at what we do that we are the supplier of choice, increasingly seen as a local producer everywhere in the world."

Details for the Fourth Quarter and Full Year
Net income for the 1997 fourth quarter included after-tax losses of $11.7 million, or 7 cents per share, as a result of marking to market certain aluminum commodity contracts. Of these losses, $3.6 million, or 2 cents per share, is attributable to fabricated product sales contracts that were delivered during the fourth quarter and $8.1 million, or 5 cents per share, is related to fabricated product sales contracts that will be shipped in future quarters. For the comparable 1996 quarter, these contracts resulted in after-tax gains of $8 million, or 5 cents per share.

Fourth quarter 1997 net income also included after-tax gains of $32.7 million ($72.9 million pretax), or 19 cents per share, reflecting the sale of a majority interest in Alcoa's Brazilian cable business and the sale of land in Japan. Fourth quarter 1996 net income included a net charge of $16.8 million ($18.4 million pretax), or 10 cents per share, for asset impairments. Excluding these one-time items, the company earned $177.6 million, or $1.04 per share for the 1997 quarter, and $152.9 million, or 88 cents per share, for the comparable 1996 quarter.

Results for the full year 1997 included net after-tax losses of $12.7 million, or 7 cents per share, for the above-mentioned aluminum commodity contracts. For 1996, these losses were $57.1 million, or 33 cents per share.

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. The 1996 year included an after-tax charge of $122.3 million ($198.9 million pretax), or 71 cents per share, for layoff provisions and impaired assets. Excluding these gains and charges, the company earned $761.2 million, or $4.41 per share, for all of 1997, and $637.2 million, or $3.65 per share, for 1996.

Shipments of aluminum products during the 1997 fourth quarter were 734,000 metric tons (mt) compared with 747,000 mt in the year ago quarter. For all of 1997, shipments were a record 2,956,000 mt compared with 2,841,000 mt in 1996.

Excluding one-time items, return on shareholders' equity was 17.1% for 1997 and 14.4% for 1996.

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 178 operating locations in 28 countries.

Financial and operating data for Alcoa and its subsidiaries follow.