Alcoa Reports Third Quarter 2007 Income from Continuing Operations of $0.64 Per Share
Board Increases Share Buyback Program to 25% of Outstanding Shares
NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE:AA):
Income from continuing operations of $558 million, or $0.64 per share,
a three percent increase from a year ago.
Revenues of $7.4 billion.
Board increases authorization to repurchase shares to 25 percent of
outstanding shares, up from previously authorized 10 percent.
Chalco sale and upcoming packaging and automotive castings sales to
provide cash and flexibility to enhance shareholder value.
Debt-to-capital stands at 29 percent.
Trailing 12-month ROC stands at 11.8 percent including significant
growth investments; excluding investments in growth, ROC is 14.6
Quarterly results impacted by Chalco gain, restructuring and
impairment charges, currency, seasonality, metal prices, higher energy
costs and softening markets.
Alcoa (NYSE:AA) today reported third quarter income from continuing
operations of $558 million, or $0.64 per diluted share. Third quarter
income from continuing operations increased three percent from $540
million, or $0.62, in the third quarter of 2006. Income from continuing
operations was $716 million, or $0.81, in the second quarter of 2007.
As a result of the Companys strong capital
structure and healthy cash flows, Alcoas
Board of Directors has authorized the repurchase of up to 25 percent of
the companys outstanding common stock, or
approximately 217 million shares. Under the earlier repurchase program,
43 million shares, or approximately five percent, had already been
repurchased by the end of the third quarter, leaving the company with
authorization to buy back approximately 174 million shares.
The Chalco sale, combined with proceeds from
the upcoming sales of our packaging and auto castings businesses, give
us a strong balance sheet, increased flexibility to ramp-up share
repurchases, and deliver greater shareholder value,
said Alcoa Chairman and CEO Alain Belda.
Net income for the third quarter of 2007 was $555 million, or $0.63,
compared to $537 million, or $0.61, in the third quarter of 2006 and
$715 million, or $0.81, in the 2007 second quarter. Third quarter
results were impacted by the Chalco sale, charges associated with
planned asset sales and restructuring, higher petroleum and energy
costs, seasonality, lower metal prices and softness in the North
In the first nine months of 2007, net income was $1.93 billion, or
$2.20, compared with $1.89 billion, or $2.16, in 2006. Year-to-date
income from continuing operations was $1.95 billion compared with $1.90
billion in 2006.
Revenues for the quarter were $7.4 billion, compared with $7.6 billion
in 2006 and $8.1 billion in the 2007 second quarter. This quarters
results were primarily impacted by the exclusion of the companys
soft alloy extrusion business as a result of forming a joint venture
with Sapa in June, lower metal prices, seasonality and softness in the
North American markets.
Macroeconomic drivers such as the weakening
US dollar, higher petroleum costs, and market softness in North America
impacted the quarter, said Belda. Despite
these challenges, we have established all-time records for revenue, net
income, earnings per share and cash from operations in the first nine
months of the year, added Belda.
Cash from operations for the quarter was $592 million, including the
impact of approximately $200 million in contributions to the companys
pension plans. Year-to-date, cash from operations was $2.47 billion,
including pension contributions.
Capital expenditures for the quarter were $941 million, with 66 percent
dedicated to growth projects. Year-to-date, the company has invested
$1.74 billion in growth projects, or 67 percent of capital expenditures.
The companys debt-to-capital ratio at the
end of the third quarter of 2007 stood at 29 percent, the lowest since
The Companys trailing 12-month return on
capital (ROC) stands at 11.8 percent including significant investments
in growth projects and construction work in progress; excluding
investments in growth and construction work in progress, ROC is 14.6
Segment and Other Results
Alumina After tax operating income
(ATOI) was $215 million, a decrease of $61 million, or 22 percent, from
the prior quarter. System production decreased by a net of 24 kmt as
production increases throughout the system offset much of the loss in
Jamaica due to Hurricane Dean. Higher energy costs, the weakening US
dollar and hurricane damages also impacted the quarter.
Primary Metals ATOI was $283
million, down $179 million, or 39 percent, compared to the prior
quarter. The ATOI decrease resulted from lower LME prices and premiums,
unfavorable energy and currency, Iceland start-up costs and continued
curtailment costs at Rockdale and Tennessee. Third-party realized metal
prices decreased $145 per metric ton, or 5 percent, to $2,734 per ton.
Primary metal production for the quarter increased 33 kmt to 934 kmt.
The Company purchased approximately 58 kmt of primary metal for internal
use as part of its strategy to sell value-added products.
Flat-Rolled Products ATOI was $61
million, down $32 million, or 34 percent, from the prior quarter and up
$13 million, or 27 percent, from the year ago quarter. The decrease in
ATOI from the prior quarter was primarily due to seasonally lower
volumes and unfavorable product mix.
Extruded and End Products ATOI was
$13 million, down $33 million from the prior quarter and down $3 million
from the year ago quarter. The decrease from the prior quarter is
primarily related to the soft alloy extrusion businesses for which no
depreciation was recorded in the second quarter while the assets were
held for sale. Additionally, these businesses were impacted by normal
seasonality. The majority of the Companys
soft alloy extrusions business became part of the Sapa joint venture on
June 1, 2007. The global hard alloy extrusions and building and
construction systems business remained strong.
Engineered Solutions ATOI was $60
million, down $45 million, or 43 percent, from the prior quarter and
down $15 million, or 20 percent, from the year ago quarter. The 2007
third quarter results were impacted by normal seasonality and increased
weakness in the automotive industry. In addition, a one-time inventory
charge as part of restructuring our automotive business and a German tax
rate change impacted the segment.
Packaging and Consumer ATOI was $36
million, up $12 million, or 50 percent, from the year ago quarter and
down one million, or three percent, from the prior quarter. On a
sequential basis, productivity improvements offset most of the expected
seasonal decline. The significant improvement over the prior year
quarter was due to productivity gains across all businesses.
Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
October 9th to present the quarter's results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com under
Alcoa is the world's leading producer and manager of primary aluminum,
fabricated aluminum and alumina facilities, and is active in all major
aspects of the industry. Alcoa serves the aerospace, automotive,
packaging, building and construction, commercial transportation and
industrial markets, bringing design, engineering, production and other
capabilities of Alcoa's businesses to customers. In addition to aluminum
products and components including flat-rolled products, hard alloy
extrusions, and forgings, Alcoa also markets Alcoa®
wheels, fastening systems, precision and investment castings, structures
and building systems. The company has 116,000 employees in 44 countries
and has been named one of the top most sustainable corporations in the
world at the World Economic Forum in Davos, Switzerland. More
information can be found at www.alcoa.com