Alcoa CEO maintains positive outlook after strong fourth quarter

Packaging materials supplier Alcoa has revealed strong fourth quarter results.

The company, which is the world’s leading producer of primary aluminium, has revealed income from continuing operations of $258 million (€196.1m). This is Alcoa’s highest quarterly income since the economic downturn and $197million (€149.7m) higher than the third quarter of 2010.

Fourth quarter income from continuing operations included a $35 million (€26m), or $0.03 per share, positive impact from special items, compared to a negative impact of $35 million, or $0.03 per share, in the third quarter of 2010 and a negative impact of $275 million, or $0.28 per share, in the fourth quarter of 2009.

The company also set an all-time record for cash from operations and a fourth-quarter record for free cash flow.

Higher pricing continued strengthening in most end markets and improved productivity as a result of the company’s cash sustainability program drove improved earnings. Results were offset somewhat by a weaker US dollar and higher energy and raw material costs.

“We exceeded all of our targets and continued to build momentum,” says Klaus Kleinfeld, Alcoa chairman and CEO. “We delivered all-time record cash from operations, record fourth-quarter free cash flow, improved earnings, grew revenue and paid down debt.

“In 2011, we see aluminium growing another 12 per cent on top of last year’s 13-per cent improvement. We are well positioned to outpace the recovery in the markets we serve and grow shareholder value.”

Alcoa projects global demand for aluminium to double by 2020. For 2011, the company projects growth in all end markets on a global basis.

Revenue for the fourth quarter was $5.7 billion (€4.3 bn), up seven per cent compared to the third quarter. The increase was driven by an improvement in realized pricing for alumina (nine per cent) and aluminium (11 per cent) as well as continued strengthening in most end markets.

Income from continuing operations in the quarter was $258 million (€196m), or $0.24 per share, compared to $61 million (€46.3m), or $0.06 per share, in the previous quarter and a loss of $266 million (€202m), or $0.27 per share, in the fourth quarter of 2009.

Net income was $258 million (€196m) in the fourth quarter, an increase of $197 million from sequential quarter income of $61 million, and an increase of $535 million (€406m) from the prior year quarter loss of $277 million (€210m).

Cash from operations was an all-time record $1.4 billion (€1 bn), an increase of $978 million (€743m) from the previous quarter and a $246 million (€187m) improvement from the fourth quarter of 2009.

Higher earnings, favourable changes in working capital and lower interest and tax payments, drove the sequential increase in cash from operations. Alcoa generated $1 billion (€759m) in free cash flow in the quarter, an increase of $829 million (€630m) over the third quarter. Free cash flow was $244 million (€185m) higher than the fourth quarter of 2009.

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