Alcoa reports first loss in eight years
By Joe Mandak
Associated Press
PITTSBURGH Aluminum giant Alcoa Inc. reported its first quarterly loss in eight years yesterday, citing the cost of plant closings and job cuts.
Not counting one-time after tax charges, however, the company's earnings beat analysts' reduced expectations.
The Pittsburgh-based company posted a loss of $142 million, or 17 cents a share, for the quarter ended Dec. 31. That compares with earnings of $392 million, or 45 cents a share in the fourth quarter last year.
Excluding a $241 million restructuring charge, the company earned $99 million, or 11 cents per share.
Analysts polled by Thomson Financial/First Call predicted earnings of 10 cents a share, following the company's announcement in November that it planned to take an after-tax restructuring charge of $225 million.
Alcoa cut 6,500 jobs at facilities in the Americas and Europe while consolidating or closing plants. Analysts had predicted earnings of 30 cents a share before Alcoa announced the job cuts and plant closings.
Analysts said Alcoa's efforts to improve the profits by cutting costs are made more difficult by tough economic times.
"The fact that the company didn't achieve any of its cost-cutting goal in the quarter ... is a reflection of how tough the economy is," said analyst Stephen Bonnyman of Toronto-based CIBC World Markets Inc.
The company's fourth quarter revenues fell 21 percent to $5.2 billion, down from $6.6 billion for the same quarter last year.
"We are not satisfied with these results," said Alain Belda, chairman and CEO. "We are confident that the restructuring of our primary and fabricating businesses, coupled with our continued focus on implementing the Alcoa Business System and our commitment to grow the company, will enable us to resume sustainable savings and profitable growth in 2002 and beyond."
Victor Lazarovici, an analyst with BMO Nesbitt Burns in New York agreed the moves eventually should pay off for Alcoa.
"If we get back to normal times, whatever they are, the cost reductions they're trying and the restructuring they've been doing for many, many years now ... will work," Lazarovici said.
For the year, Alcoa reported annual earnings of $908 million, or $1.05 a share, down 39 percent from last year's annual earnings of $1.48 billion, or $1.80 a share. Excluding one-time charges, the company earned $1.26 billion, or $1.46 per share, 3 cents ahead of analysts' expectations.
Revenue was essentially flat at $22.9 billion.
Alcoa has scheduled a conference call with analysts Jan. 23.
Alcoa officials reported annual savings of $348 million, saying cost reductions in the fourth quarter were driven by weak markets and restructuring in its fabricating business.
Belda said the company remains on track to have $1 billion in annual cost savings by the end of 2003.