Alcoa Q1 2016 Results: All Arconic segments on track to deliver $650 mln productivity savings

Lightweight metals major Alcoa announced yesterday first quarter 2016 results reflecting solid performance.

During the period under review, downstream and value-added business segments of Alcoa, namely, Global Rolled Products (GRP), Engineered Products and Solutions (EPS) and Transportation and Construction Solutions (TCS) reported combined revenue of $3.3 billion. These three business divisions, which would be merged to form the innovation and technology-driven Arconic company after Alcoa's separation, reported after-tax operating income (ATOI) of $269 million, adjusted EBITDA of $537 million and adjusted EBITDA margin of 16.4 per cent. ATOI and adjusted EBITDA increased 8 and 7 per cent, respectively, year-over-year.

The combined segments also generated $179 million in productivity as part of their business improvement programs, announced in the first quarter. All Arconic segments are on track to deliver $650 million productivity savings in 2016, said company sources.

Segment Highlights:

Global Rolled Products

ATOI in Q1 was $68 million, compared to $54 million in Q1 2015, and $52 million in Q4 2015. Year-over-year, this segment’s ATOI increased by approximately 26 per cent due to strong productivity and automotive growth – automotive sheet shipments were up 38 percent year-over-year.

Engineered Products and Solutions

In Q1, EPS reported record revenue of $1.4 billion, up 15 per cent year- over-year, driven by aerospace acquisitions. ATOI was a Q1 record of $162 million, up $6 million, or 4 perc ent, year-over-year, and up $39 million, or 32 per cent, sequentially. Adjusted EBITDA margin was 21.0 per cent in Q1 2016 compared to 22.4 per cent in the year-ago quarter.

Transportation and Construction Solutions

TCS delivered ATOI of $39 million in Q1, up $1 million, or 3 per cent, year-over-year. The increase was primarily driven by productivity gains that more than offset cost increases and weakness in the heavy duty truck and Brazilian construction markets. Despite this, TCS delivered its highest-ever Q1 adjusted EBITDA margin of 14.9 per cent. The segment’s Q1 2015 adjusted EBITDA margin was 13.4 per cent.