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Alcoa with disappointing third quarter earnings
Aluminium heavyweight Alcoa recently
reported disappointing third
quarter earnings. Net income was
USD268 million (Q3, 2007: USD555m)
which corresponds to USD0.33 per
diluted share (USD0.63). The results
include a previously announced
USD31m after-tax charge for the temporary
curtailment of the Rockdale,
TX aluminium smelter. The negative
impact of currency translation on a
sequential basis was USD52m. Included
in the third quarter 2007 results
was the net benefit of USD218m
or USD0.25 per share, for the gain
on the sale of the company’s stake
in Chalco, restructuring and transaction
costs. Net income in the second
quarter of 2008 was USD546m, or
USD0.66 per share.
Recently, aluminium prices had
fallen steeply and demand had softened
further, while input costs remained
high, commented Alcoa President
and CEO Klaus Kleinfeld. “The
resulting margin squeeze will have a
greater impact going forward, but will
be somewhat mitigated by the easing
of energy prices and a stronger USdollar.”
As to Kleinfeld, Alcoa is stopping
all non-critical capital projects,
making targeted reductions to match
market conditions and adjusting its
manufacturing capacity to meet demand.
“We are halting production at
our smelter in Rockdale, Texas, adjusting
alumina capacity accordingly.
And we are suspending our share
buy-back programme”, he said.
Revenues for the third quarter
were USD7.2 billion, so slightly down
compared to the previous quarter but
with an increase of ten percent compared
to the corresponding period a
year earlier. In the first nine months
of 2008, net income was USD1.1 billion,
while revenues were USD22.2
billion.
Alro receives NADCAP certificate
Vimetco
Alro SA, the Romanian subsidiary of
Vimetco and largest aluminium producer
in central and eastern Europe,
has received the NADCAP (National
Aerospace and Defence Contractor
Accreditation Programme) performance
certification for conformity with
Alro shop floor in Slatina
aerospace industry requirements. The
certificate was awarded by the NAD-
CAP Management Council, in accordance
with SAE Aerospace Standard
AS 70003, following the testing of
aluminium alloys produced at Slatina
for heat treatment, conductivity measurement,
tensile testing, hardness and
metallography.
The certification is the result of Alro’s
significant investment programme
which is focused on diversifying output,
increasing high value added production
and improving quality. Over
the past six years, the company has
invested more than USD270 million
in technological and environmental
projects, improving the production
mix and the quality of output. This
year, Alro successfully completed the
modernisation of
its cold rolling mill,
following a USD4.8
million investment,
doubling the mill’s
processing capacity
to 36,000 tpa
and improving the
quality of flat rolled
products such as
sheets and coils
(see ALUMINIUM
4/2008, pp 14-19.
Commenting on
the accreditation,
Gheorghe Dobra,
General Manager of Alro SA, which
is located in Slatina, said: “Since its
privatisation, Alro has implemented
an ambitious investment programme
aimed at transforming the company
into a producer of value added goods.
With Alro’s competency now fully
recognised by the aerospace industry,
we look forward to seeing the company
progress as a regular supplier
of top quality products that meet the
demands of the most exigent customers.”
Vimetco acquires coal mine in PrC
Alro’s parent company Vimetco recently
acquired the Yaoling Coalmine
in Gongyi, Henan Province, China,
through its subsidiary company Henan
Yulian. The RMB213m purchase
has been completed through a joint
venture with Yongcheng Coal & Electricity
Co., the current mine operator,
and the Gongyi city government. The
partnership has acquired a 65% stake
in the asset with the remaining 35%
owned by current employees of the
mine. Of the partnership holding, both
Henan Yulian and Yongcheng have a
45% share, with the remaining 10%
held by the Gongyi city government.
The acquisition of the Yaoling mine
ensures mining rights for 33 years
until 2041. The mine, which employs
about 900 people, covers an area of
10.56 km 2 and has workable reserves
of 27m tonnes. Total production for
2007 was 580,000 tonnes. As a result
of the acquisition, Henan Yulian expects
to receive 600,000 tonnes of
coal per year, at market prices.
Vimetco’s acquisition of the coal
mine complements the company’s
existing assets at Gongyi and will
strengthen the integrated power generation
for the two smelting plants.
The coal mine also provides the potential
to support further production
capacity expansion.
ALUMINIUM · 11/2008