Jan. 20, 2016

Curtailments, Closures Lead to Quarterly Loss for Alcoa

Alcoa reported a net loss of $500 million in the fourth quarter due largely to charges related to the closures and curtailments of capacity in the company’s Upstream business. Those closures resulted in $565 million in charges for the New York-based aluminum producer. In comparison, net income in the fourth quarter of 2014 totaled $159 million.

Alcoa reported a net loss of $121 million for full-year 2015 as a result of the negative fourth quarter. In 2014, the company reported net income of $268 million.

Alcoa’s fourth-quarter sales totaled $5.2 billion, an 18 percent decline from the same quarter in 2014. Organic growth in aerospace and acquisitions was offset by substantial declines in alumina and aluminum prices, as well as the impact of divested, curtailed or closed facilities. Revenue in 2015 totaled $22.5 billion, down 6 percent from the prior year.

“We substantially strengthened our aerospace offerings through innovations and acquisitions and our customers responded favorably, awarding us $9 billion in aerospace contracts. We continued to ramp up our automotive business and shift the midstream to a higher-margin product mix,” said Klaus Kleinfeld, Alcoa chairman and CEO. “In the Upstream, we faced harsh headwinds with prices for alumina down 43 percent and aluminum down 28 percent. As a result of our closures, curtailments, productivity actions and new business structure we improved competitiveness and strengthened the portfolio. We are fully on track to launch two strong, standalone companies in the second half of 2016.”

Fourth-quarter after-tax income in the Global Rolled Products segment totaled $52 million, flat with the same quarter in 2014. Growth of 18 percent in automotive shipments was offset by cost increases and fewer spot market opportunities in aerospace and packaging. Investments in growth projects, including the Tennessee automotive expansion and Micromill commercialization, also affected the results.

Looking ahead, Alcoa projects another strong year for global aerospace sales, forecasting increases of 8-9 percent. In North America, the heavy-duty truck and trailer market is expected to decline 19-23 percent this year after a strong 2015, which was the fourth-highest production year on record.

Alcoa expects the building and construction market to continue to improve in 2016, with global sales growth of 4-6 percent. In the industrial gas turbine market, the company projects a 2-4 percent growth rate this year.


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Sunday, October 22, 2017