Alcoa Strengthens Cash Position and Returns to Profitability in Third Quarter
Income from continuing operations of $73 million, or $0.07 per share
Excluding restructuring and special items, income of $39 million, or $0.04 per share
Revenues up 9 percent over second quarter 2009
Cash Sustainability initiatives exceeding targets
Actions offsetting negative currency and energy impacts
EBITDA of $454 million in third quarter 2009
Cash from operations of $184 million in third quarter 2009
Debt-to-capital at 38.3%, down 140 basis points sequentially
Cash on hand of $1.1 billion
NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE: AA) today announced third quarter 2009 income from continuing operations of $73 million, or $0.07 per diluted share, compared to a loss from continuing operations of $312 million, or $0.32 per share, in the second quarter 2009. Income from continuing operations in the third quarter of 2008 was $306 million, or $0.37 per share. Excluding restructuring and special items, income for the third quarter 2009 was $39 million, or $0.04 per share.
The third quarter of 2009 had net income of $77 million, or $0.08 per share, compared with a net loss for the second quarter of 2009 of $454 million, or $0.47 per share. Net income in the third quarter of 2008 was $268 million, or $0.33 per share. Discontinued operations for the third quarter of 2009 had income of $4 million, or $0.01 per share. The second quarter of 2009 had a loss of $142 million, or $0.15 per share.
Restructuring and special items in the quarter totaled $34 million, or $0.03 per share. These items included a gain on the completion of a transaction to acquire bauxite and alumina refining interests in Suriname of $35 million and restructuring charges of $17 million before tax ($1 million after tax and noncontrolling interests).
Revenues for the quarter were $4.6 billion compared with $4.2 billion in the second quarter of 2009, a nine percent increase. Revenues were $7.0 billion in the third quarter of 2008. Sequentially, revenues were helped by an increase in realized prices for primary aluminum to $1,972 per metric ton from $1,667 per metric ton in the second quarter, as well as stabilization in the end markets.
“The financial and operational measures we took in the first half of the year are having a strong positive impact on our cash position and profitability,” said Klaus Kleinfeld, Alcoa President and Chief Executive Officer. “Despite unfavorable currency and energy headwinds, our performance this quarter indicates that Alcoa is weathering the economic storm and is in excellent shape to benefit when the market recovers.”
The Company is exceeding all the targets of its Cash Sustainability Program, which helped to offset negative currency and energy impacts in the quarter of $89 million. Overhead savings are $375 million, 188 percent of the full year target for 2009, and procurement savings are $1.61 billion, 107 percent of the full-year target. Reductions in working capital have generated $780 million in cash, or 98 percent of the 2009 target of $800 million.
Cash from operations in the quarter was $184 million compared with $328 million in the second quarter of 2009 as working capital reductions continued, yet at a slower pace due to rising prices. Cash from operations in the third quarter 2008 was a negative $93 million. EBITDA in the quarter improved by $454 million from zero in the second quarter of 2009.
During the quarter, the Company received the final $520 million of proceeds from the exiting of the Shining Prospect venture and finished the quarter with $1.1 billion of cash on hand. The Company’s debt-to-capital ratio stood at 38.3 percent at the end of the quarter, a 140 basis point reduction from the second quarter of 2009.
Capital expenditures in the quarter were $370 million, on-target to reach the 2009 goal of a nearly 50 percent reduction from 2008. In the quarter, the Company commissioned its Juruti bauxite mine in Brazil and new lithographic sheet operations in Bohai, China. This follows the opening of a new end and tab line in Russia in late-June. These investments will lower costs and position the Company well for growth as economies improve in those important markets.
Revenues for the first nine months of 2009 were $13.0 billion, compared to $21.2 billion in the first nine months of 2008. Income from continuing operations for the first nine months of 2009 showed a loss of $719 million, or $0.78 per share, compared with income of $1.2 billion, or $1.40 per share, in the first nine months of 2008. The nine months of 2009 showed a net loss of $874 million, or $0.95 per share, compared to net income of $1.1 billion, or $1.35 per share, in the first nine months of 2008.
In the second half of 2009, there are signs that key markets the Company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11 percent in the second half of 2009.