Alcoa post loss, plans job cuts

Alcoa (AA-N) posted a fourth-quarter loss of US$223 million after announcing plans to cut 8,000 jobs at 70 locations worldwide. The loss represents US27 per diluted share.

By comparison, the company incurred a loss of US$142 million (US17 per share) in the fourth quarter of 2001.

The latest loss includes a special after-tax charge of US$95 million for restructuring its aerospace, automotive, industrial gas turbine and U.S. smelting operations.

Revenue between the two periods slipped to US$5.06 billion from $5.1 billion.

Net income for all of 2002 was US$420 million (49 per share) — less than half what it was in 2001. Sales between the two periods slipped to US$20.3 billion from US$22.5 billion.

The world’s largest aluminum producer attributes the loss to weakness in the manufacturing sector.

Alcoa intends to sell off assets that don’t deliver “superior returns.” The restructuring will affect operations that have experienced negligible growth, particularly in Europe and South America.

Plans call for the company to divest itself of its specialty chemicals and packaging businesses, as well as architectural assets in North America. In South America it will sell its automotive fastener operations. Proceeds from the sales will go toward reducing debt, which stands at US$8.45 billion.

The restructuring will take place during 2003, but the benefits won’t kick in until 2004. Last year, Alcoa cut around 2,000 jobs and finished the year with around 127,000 employees.

The Pittsburgh-based company still expects to meet its goal of US$1 billion in cost savings in 2003. At the end of 2002, savings amounted to US$600 million, reflecting layoffs and the idling of aluminum production capacity.

Alcoa’s shares were off US$2.42, or nearly 10% of their value, at $21.96 in mid-afternoon trading on the New York Stock Exchange on Jan. 8.

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