Alcoa Reports Strong First Quarter 2014 Results

Alcoa reported strong quarterly results yesterday, offset by special items tied to restructuring as the Company’s transformation accelerates.

In first quarter 2014, Alcoa reported a net loss of $178 million, or $0.16 per share, which includes $276 million in special items largely tied to smelter and rolling mill capacity reductions. Excluding the impact of special items, net income was $98 million, or $0.09 per share. Alcoa’s value-add businesses drove 76 percent of segment profits in first quarter 2014, with record first quarter results in Engineered Products and Solutions and a near three-fold sequential increase in profitability in Global Rolled Products. Alumina reported the best quarterly after-tax operating income (ATOI) since 2011 and the combined upstream segments have improved operating performance for the 10th consecutive quarter.

“We hit record downstream profitability, nearly tripled results in the midstream, and strengthened our upstream business for the 10th quarter in a row,” said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. “Our transformation is accelerating – we’re powering growth in our value-add businesses and aggressively reshaping our commodity business.”

First quarter 2014 revenues were $5.5 billion, down 2 percent sequentially on lower Primary Metals third-party shipments. Capacity reductions in Primary Metals combined with an 8 percent decline in year-over-year realized aluminum prices caused revenues to fall 6 percent from the first quarter last year. The Company’s value-add businesses drove 58 percent of Alcoa’s first quarter revenues.

Sequentially, first quarter 2014 results compare to a net loss of $2.3 billion, or $2.19 per share, in fourth quarter 2013. Excluding special items, first quarter 2014 results compare to net income of $40 million, or $0.04 per share, in the sequential period.

Year-over-year, first quarter 2014 results compare to net income of $149 million, or $0.13 per share, in first quarter 2013. Excluding special items, first quarter 2014 net income compares to $121 million, or $0.11 per share, in the year-ago period when realized aluminum prices per metric ton were $193 higher.

1Q 2014 Financial Highlights

· Net loss of $178 million, or $0.16 per share; excluding special items, net income of $98 million, or $0.09 per share

· Revenue of $5.5 billion as realized aluminum prices fell 8 percent year-over-year

· Record first quarter Engineered Products and Solutions after-tax operating income, up 9 percent year-over-year

· Global Rolled Products profitability nearly tripled sequentially

· Upstream segments improved performance for 10th consecutive quarter

· Best quarterly Alumina after-tax operating income since 2011, up 59 percent year-over-year

· Cash on hand of $665 million

· Debt-to-capital ratio 35.0 percent; net debt-to-capital ratio 33.0 percent

· Global end market growth remains solid

1Q 2014 Portfolio Transformation Highlights

· Commissioned $300 million automotive expansion in Davenport, Iowa

· Investing to double Dura-Bright® wheel production in Hungary

· Investing $40 million in high-value specialty packaging facility in Brazil

· Australian can sheet rolling mills to be permanently closed by year-end

· Reduced operating smelting capacity by 1.2 million metric tons, or 28 percent, since 2007, once announced upstream actions executed