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October 6, 1997

Strong Earnings Despite Continuing Low Metal Prices

PITTSBURGH--October 6, 1997-- Alcoa today announced earnings of $228.1 million, or $1.32 per common share, for the third quarter of 1997. Earnings for the 1996 third quarter were $68.4 million, or 39 cents per share.

Third quarter 1997 earnings included a special net after-tax gain of $12.3 million ($18.0 million pre-tax), or 7 cents per share, reflecting a sale of equity securities that resulted in a gain of $24.7 million ($38.0 million pre-tax), which was partially offset by charges to environmental reserves. Third quarter 1996 earnings included a special after-tax charge of $65.5 million ($115.1 million pre-tax) for layoff provisions and equipment write downs. Before the charge, third quarter 1996 earnings were $133.9 million, or 77 cents per share.

Net income for the 1997 nine-month period was $594.8 million, or $3.43 per share, compared with $378.8 million, or $2.16 per share, for the 1996 nine-month period. The 1997 period included special net after-tax gains of $11.2 million, or 6 cents per share. The 1996 period included after-tax charges of $105.5 million, or 61 cents per share, for the layoff provision mentioned earlier and a second quarter charge of $40.0 million for closing the company's ceramic packaging operations.

Revenues for the 1997 third quarter were $3.4 billion compared with $3.2 billion for the 1996 third quarter. Aluminum product shipments were 742,000 metric tons (mt) compared with 717,000 mt in the year-ago quarter.

Revenues for the first nine months of 1997 were $10.0 billion compared with $9.8 billion for the first nine months of 1996, while shipments were 2,222,000 mt compared with 2,094,000 mt.

Year-to-date, 1997 results indicate continued worldwide growth and improved cost performance, which more than offset a decline in overall prices when compared with 1996. Excluding special items, return on shareholders' equity for the first nine months of 1997, annualized, was 16.8%, compared with 14.4% for the year-ago period.

Marking to market certain aluminum commodity contracts resulted in a gain of $2.6 million, or 2 cents per share, in the 1997 quarter. For the comparable 1996 quarter, these contracts resulted in after-tax losses of $16 million, or 9 cents per share.

Alcoa is the world's leading producer of aluminum. The company has 178 operating locations in 28 countries.