Revenue, Earnings Improve Year-Over-Year
4Q 2011 Highlights
Loss from continuing operations of $193 million, or $0.18 per share; excluding special items, loss from continuing operations of $34 million, or $0.03 per share
Revenue of $6 billion, down 7 percent sequentially, up 6 percent from 4Q 2010
Cash from operations of $1.14 billion, up $653 million from 3Q 2011
Record low days working capital
Free cash flow of $656 million
Cash on hand of $1.9 billion
531,000 metric tons of capacity closed or curtailed to improve competitive position
Forecasting 7 percent growth in global aluminum demand and a global aluminum supply deficit in 2012


2011 Full-Year Highlights
Revenue of $25 billion, up 19 percent over 2010
Income from continuing operations of $614 million, or $0.55 per share, more than double 2010 results; excluding special items, income from continuing operations of $812 million, or $0.72 per share
Cash from operations of $2.2 billion
Free cash flow of $906 million
Debt-to-capital ratio 35 percent


NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE:AA) today reported a loss from continuing operations of $193 million, or $0.18 per share, in fourth quarter 2011 on restructuring charges associated with the closure and curtailment of high-cost production capacity, lower aluminum prices, and continued market weakness. Excluding the net negative impact of restructuring and other special items, the loss from continuing operations was $34 million, or $0.03 per share.

The fourth quarter 2011 loss compares to income from continuing operations of $172 million, or $0.15 per share, in third quarter 2011, and income of $258 million, or $0.24 per share, reported in fourth quarter 2010.

For the full-year 2011, Alcoa reported income from continuing operations of $614 million, or $0.55 per share, more than double 2010 results. The Company ended the year in a strong cash position, with $1.9 billion cash on hand.

“Alcoa turned in solid performance in a volatile year by responding quickly to changing market conditions and relentlessly managing cash. We stayed focused on growth and took aggressive action to cut costs, improve our competitiveness, and strengthen our balance sheet,” said Alcoa Chairman and CEO Klaus Kleinfeld.

“For 2012, we expect global aluminum demand to grow 7 percent and are forecasting a global deficit in primary aluminum supply.”

Alcoa’s growth projection is ahead of the 6.5 percent rate required to meet the Company’s forecast of a doubling in global aluminum demand between 2010 and 2020. Aluminum demand grew 10 percent in 2011 on top of 13 percent growth seen in 2010.

Alcoa also projects that growing demand for aluminum, combined with market-related production cutbacks, will result in a global aluminum industry deficit of 600,000 metric tons in 2012.

Alcoa projects global growth in the aerospace (10-11 percent), automotive (3-8 percent), commercial transportation (2-5 percent), packaging (2-3 percent), and building and construction (4-5 percent) markets.

Fourth Quarter 2011

Revenue for fourth quarter 2011 was $6 billion, down 7 percent from the $6.4 billion reported in third quarter 2011, but up 6 percent over fourth quarter 2010 revenue of $5.7 billion.

Sequentially, fourth quarter revenues were lower, primarily due to continued European weakness brought on by the sovereign debt crisis and resulting global market uncertainty. Realized pricing declined for both alumina (down 9 percent) and aluminum (down 12 percent). Results were also affected by lower revenues in packaging (down 17 percent), industrial products (down 15 percent), building and construction (down 15 percent), commercial transportation (down 8 percent), and automotive (down 2 percent) compared to third quarter 2011. Aerospace revenue grew (up 5 percent) over the sequential quarter, as did revenue in the industrial gas turbine market.

Fourth quarter 2011 net loss was $191 million, or $0.18 per share, compared to income of $172 million, or $0.15 per share, in third quarter 2011 and $258 million, or $0.24 per share, in fourth quarter 2010. Adjusted EBITDA in fourth quarter 2011 was $445 million.

Included in the fourth quarter loss were $159 million of restructuring-related charges, primarily associated with the closure or curtailment of high-cost smelting production capacity, of which approximately 60 percent is non-cash. Another $26 million in charges associated with discrete income tax items and uninsured losses were offset by the positive impact of mark-to-market changes on certain energy contracts and the sale of land in Australia.

Despite deteriorating prices and market conditions in the fourth quarter, Alcoa turned in outstanding performance against the Company’s financial targets. Alcoa generated $656 million in free cash flow in the quarter, four times better than results from the sequential quarter, while cash from operations was $1.14 billion. Alcoa improved liquidity in fourth quarter 2011, with cash on hand rising 46 percent to $1.9 billion compared to third quarter 2011. The Company ended the fourth quarter with days working capital at 27, a record low and 3 days lower than 2010.

As previously announced, Alcoa plans to close or curtail 531,000 metric tons, or 12 percent, of its system smelting capacity to improve the Company’s competitive position.

Curtailments at Alcoa’s smelters in Portovesme, Italy, and La Coruña and Avilés, Spain, represent 240,000 metric tons, or 5 percent, of Alcoa’s global capacity. The previously announced closing of Alcoa’s smelter in Alcoa, Tennessee, and two lines at the Company’s Rockdale, Texas, smelter, account for another 291,000 metric tons of capacity reduction.

In addition to the closures and curtailments, Alcoa will aggressively accelerate actions to reduce the cost of raw materials used by its Primary Products business and will adjust capacity across the Company’s global refining system to reflect internal demand as well as prevailing market conditions.

2011 Full-Year

For the year 2011, revenue was $25 billion, compared to $21 billion in 2010. Income from continuing operations was $614 million, or $0.55 per share, in 2011 compared with $262 million, or $0.25 per share, in 2010. In 2011, income from continuing operations includes special items resulting in a net negative impact of $198 million, or $0.17 per share, compared with special items resulting in a net negative impact of $297 million, or $0.29 per share, in 2010. Excluding the impact of special items, income from continuing operations was $812 million, or $0.72 per share, for 2011.

Full-year 2011 net income was $611 million, or $0.55 per share, compared to $254 million, or $0.24 per share, in 2010.

Alcoa turned in strong performance against all of its financial targets in 2011. Capital spending for 2011 was $1.3 billion, 86 percent of the target. For the year, Alcoa invested $249 million in the Company’s joint venture in Saudi Arabia, 62 percent of the target. The Saudi project continues on-time and on-budget, with first production in the smelter and rolling mill scheduled for 2013.

Alcoa finished 2011 with a debt-to-capital ratio of 35 percent, consistent with the targeted range of 30 to 35 percent. Debt-to-capital was negatively impacted by the annual measurement of the Company’s pension plan liability, due to a significantly lower discount rate.

Alcoa also generated $906 million in free cash flow for the year, $2.2 billion in cash from operations, and ended the year with $1.9 billion cash on hand.