Alcoa announced today income from continuing operations for the first quarter 2005 of $273 million, or $0.31 per diluted share.
Net income for the quarter was $260 million, or $0.30. Income from continuing operations for the first quarter 2004 was $0.41, or $0.39, in the fourth quarter 2004. For the first quarter 2004 net income was $0.41, or $0.30, in the fourth quarter 2004.
Both first quarter 2005 income measures include negative impacts totaling $0.09 per share for: the tax impact on Alcoa’s sale of its Elkem investment ($39 million after tax); restructuring charges ($25 million after tax); and costs of integrating the recently acquired Russian business ($12 million after tax). The fourth quarter of 2004 included a gain of $37 million, or $0.04, on the Juruti transfer, while the first quarter of 2004 include a gain of $58 million, or $0.07, on the sale of specialty chemicals.
“Underlying business performance improved in the quarter as we captured the benefits of higher metal prices and a stronger economy in North America,” said Alcoa Chairman and CEO Alain Belda. “We were able to regain traction on the cost initiative, overcoming cost inflation increases, to deliver savings to the bottom line.
“As we move forward, we will continue to tackle costs, to benefit from strong demand in end markets and the sustained high commodity prices,” said Belda. “We are focused on delivering near-term results while we continue to build for the future.”
Results Overview
Sales in the first quarter rose to $6.289 billion, up 13 percent over the first quarter of 2004, and the highest in four years. On a sequential quarter basis, revenue increased 4 percent, driven by higher primary metal and alumina prices as well as strength in the flat rolled products, extruded products, and engineered solutions segments.
Four of the company’s six reporting segments achieved double-digit improvements in profitability over the fourth quarter of last year. Primary metals, flat-rolled products, extruded products, and engineered solutions all grew profits sharply with both higher volumes and favorable pricing. Strong end markets kept demand high in both upstream and downstream businesses. On an operational basis, the alumina segment also achieved double-digit profit improvement, excluding the Juruti gain in the fourth quarter 2004, as higher contract prices drove stronger profitability. The packaging segment was slowed by seasonal declines and increased costs.
The company’s cost-savings initiatives offset cost inflation and achieved an additional $15 million of savings in the quarter, or $60 million annualized, toward the company’s cost-savings goal. The company also announced a restructuring plan that will be completed over the next twelve months, resulting in an after-tax charge of $25 million and approximately $45 million in annualized savings when complete. The company is contemplating additional charges in the second quarter as further restructuring initiatives are finalized.
The company’s trailing twelve month return on capital stood at 7.8 percent.
Murdok | Breaking eBusiness News
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