Alcan earnings more than halved

Montreal-based Alcan (AL-T), the world’s second-largest aluminum producer, has posted second-quarter net income of US$74 million, less than half what it made during the same period in 2000.

The decline is thanks mainly to lower aluminum prices and a net non-operating, after-tax charge of US$31 million. This consisted mainly of a US$20-million charge on the sale of its bauxite and alumina operations in Jamaica. Excluding non-operating items, net income for the quarter was US$105 million (33per share), down from US$144 million (66 per share) a year earlier.

Earnings for the recent quarter amounted to US23 per share, down from US70 per share (US$153 million) a year earlier. Sales revenues between the two periods rose to US$3.1 billion from US$2 billion. This increase is attributed mainly to the merger with Alusuisse Group. This was completed in October 2000. Revenues fell 3% from the first quarter on lower metal prices.

During the latest quarter, Alcan’s total aluminum volume was more than 1 million tonnes, up from 838,000 tonnes a year earlier, but down from the first quarter when about 1.1 million tonnes were produced. The shortfall from the first quarter is attributed in part to the closure of the foil operations at Rogerstone, U.K.

For the first six months of 2001, the company earned US$211 million (US65 per share), compared with US$327 million (US$1.48 per share) a year earlier. Excluding non-operating items, earnings per share were US92, down from the year-ago US$1.44.

Travis Engen, Alcan’s CEO, says the company’s operating cash flow of US$239 million “compares well to the previous quarter.” He says the company remains committed to its financial forecast of earnings of US$3 billion (EBITDA) and free cash flow of US$1.25 billion for 2002.

Alcan is making “good progress with the merger integration and is now significantly ahead of schedule with regard to the synergies of US$200 million,” he says.

The company expects aluminum consumption in the western world to fall by 1.9% this year. Three months ago, the estimate was just 0.7%. The biggest decline, 5%, is forecast for North America, where consumption rose by 0.7% last year. Alcan sees aluminum consumption growing by just 1.1% in Europe this year, down from 3.8% last year. A decline of 2% is predicted for Asia, against 6.9% growth in 2000.

Alcan shares slipped $6.32, or 9.4%, to $61.18 in afternoon trading on the Toronto Stock Exchange. At June 30, the company had US$138 million in cash and time deposits.