Jul 11 2006
Alcoa has announced second quarter 2006 income from continuing operations of $752 million, or $0.86 per diluted share, the highest quarterly profit in the company's more than 115-year history.
Income from continuing operations of $752 million, or $0.86, was 52 percent better than the $496 million, or $0.56, in the second quarter of 2005, and 22 percent higher than the $615 million, or $0.70, in the previous quarter.
Net income for the quarter was a record $744 million, or $0.85, 62 percent higher than the $460 million, or $0.52, in the second quarter of 2005, and 22 percent higher than the $608 million, or $0.69, in the previous quarter.
Included in the second quarter results are previously announced after-tax charges of $35 million, or $0.04 per share, associated with ratification of a U.S. labor contract and costs to prepare for a potential work stoppage.
For the first half of 2006, income from continuing operations was $1.37 billion, up 79 percent from last year's $764 million first-half results. First half 2006 net income of $1.35 billion was higher than the full-year results of all but one year in the company's history.
Revenues for the quarter increased 10 percent sequentially to $7.96 billion, the highest quarterly sales in the company's history, as each of the company's six global business segments achieved higher volumes. Results were driven by higher LME prices and strong market demand in the aerospace, building and construction, commercial vehicle and can sheet markets. Compared to the year-ago quarter, sales have grown 19 percent.
"Alcoans have generated another record quarter - delivering today while we continue building for the future," said Alain Belda, Alcoa Chairman and CEO. "By creating solutions for our customers and continuously improving productivity, we have driven record top and bottom line performances.
"We are consistently delivering returns well in excess of the cost of capital, generating cash to fund strategic growth projects, and keeping our balance sheet strong," added Belda.
In the quarter, capital expenditures were $729 million, 64 percent of which was devoted to growth projects designed to capture opportunities in global aluminum consumption, which is expected to double by 2020. Year to date, the company's capital expenditures stand at $1.32 billion, primarily dedicated to growth projects such as the 341,000 mtpy Alcoa Fjardaal smelter in Iceland, the Mosjoen anode plant in Norway, and the Pinjarra alumina refinery upgrade in Australia.
Cash from operations for the quarter was $699 million, a $912 million improvement from the previous quarter, and $315 million better than the second quarter of 2005.
Days of working capital improved three days in the quarter compared to the second quarter of last year. Working capital dollars increased from the previous quarter due to the building of strategic inventories in the event of a work stoppage, higher prices, and continued strong markets. The debt-to-capital ratio declined slightly to 32.0 percent at the end of the quarter, within the Company's target range and while continuing capital investments in strategic growth projects around the world.
During the quarter, Alcoa took several additional strides in its strategic growth program, including: the acquisition of a 70% stake in a brazing sheet facility in Kunshan, China to serve the automotive market; the signing of an MOU with Vinacomin for a possible bauxite and alumina refinery joint venture in the Dak Nong Province of Vietnam; the opening of the Company's first plant in Bulgaria to produce consumer packaging products; and a sales operation in South Africa to serve the aluminum wheels market. During the quarter, the Company also announced its plan to divest its Home Exteriors business to free up resources to invest in strategic growth opportunities.
The Company's year-to-date annualized return on capital (ROC) stood at 15.4 percent.
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