April 12, 2011
Alcoa Reports 20 Percent Increase in Income from Continuing Operations and 22 Percent Year-on-Year Revenue Growth
Alcoa announced today first quarter 2011 income from continuing operations of $309 million, or $0.27 per share, a 20 percent improvement over fourth quarter 2010, led by improved pricing and growing demand for aluminum in major end markets. Income from continuing operations, excluding a negative impact for special items of $8 million, or $0.01 per share, was $0.28 per share.
First quarter 2011 income from continuing operations was the highest since second quarter 2008, and compares to fourth quarter 2010 income from continuing operations of $258 million, or $0.24 per share, and a first quarter 2010 loss from continuing operations of $194 million, or $0.19 per share. Fourth quarter 2010 income from continuing operations included a $35 million, or $0.03 per share, positive impact for special items, while the loss from continuing operations in first quarter 2010 included a $295 million, or $0.29 per share, negative impact for special items.
Special items in first quarter 2011 included costs associated with restructuring, the acquisition of the aerospace fastener business of the TransDigm group and the acquisition of full ownership of carbothermic aluminum production technology, partially offset by favorable mark-to-market changes on certain power derivative contracts.
Net income for first quarter 2011 was $308 million, or $0.27 per share, compared to net income in fourth quarter 2010 of $258 million, or $0.24 per share, and a net loss in first quarter 2010 of $201 million, or $0.20 per share.
The improvement over fourth quarter 2010 results was driven by higher realized prices for alumina and aluminum and growing demand for aluminum products in major end markets, along with productivity improvements. These were offset somewhat by a weaker U.S. dollar, along with higher energy and materials costs. Alcoa reaffirmed the Company’s projection that global aluminum demand would grow 12 percent in 2011 on top of the 13 percent growth rate in 2010.
"It was an excellent first quarter as we improved profitability across all business segments, set profit records in our midstream and downstream businesses and grew substantially," said Alcoa Chairman and CEO Klaus Kleinfeld. "This was a total team effort.
"Our outlook for the rest of 2011 and beyond remains very positive due to the world's growing population, increasing urbanization, and aluminum's advantages as a light, strong and recyclable material."
Adjusted EBITDA for the first quarter was $955 million, up 22 percent from fourth quarter 2010, up 60 percent from first quarter 2010, and the best quarterly performance since third quarter 2008. Adjusted EBITDA margin improved to 16.0 percent for the quarter, compared to 13.8 percent in fourth quarter 2010 and 12.2 percent in first quarter 2010.
Revenue for first quarter 2011 was $6.0 billion, an increase of 22 percent over first quarter 2010 and 5 percent over fourth quarter 2010.
Third-party pricing increased in the quarter for alumina (15 percent) and aluminum (7 percent) compared to fourth quarter 2010. Third-party pricing also increased compared to first quarter 2010 for both alumina (21 percent) and aluminum (15 percent).
End markets showed continued revenue growth in the first quarter, including automotive (30 percent), aerospace (7 percent), packaging (14 percent), industrial products (13 percent), and commercial transportation (12 percent), compared to fourth quarter 2010. Compared to first quarter 2010, revenues were up in aerospace (20 percent), packaging (45 percent), building and construction (26 percent), and commercial transportation (37 percent).
Both Flat-Rolled Products and Engineered Products and Solutions segments turned in record performance for the quarter. Flat-Rolled Products’ adjusted EBITDA was a first-quarter record at $173 million. Engineered Products and Solutions set a record for highest-ever adjusted EDITDA margin at 18.4 percent.
Alcoa is well on track to meet the Company’s 2011 financial targets, with debt-to-capital ratio improving to 33.6 percent, 130 basis points better than fourth quarter 2010. Capital spending excluding the Ma’aden project was $204 million in the quarter, 14 percent of the 2011 target. Expenditures on the Ma’aden project were also on track at $85 million. An investment in working capital to support continued strong growth in end markets, coupled with higher realized pricing, resulted in cash used in operations of $236 million and negative free cash flow of $440 million.