Alcoa 1997 Annual Report Download - page 31

29
Pa cific — Alcoa’s p r im a r y op erat ion s in t h e Pacific r egion a re t h os e
of Alcoa of Au st ra lia (AofA). In 1997, reve nues for th is region tot aled
$2,222, of wh ich 84% w er e at t r ibu t able t o AofA. Op erat in g p rofit for
1997 a m ou n t ed t o $482, w it h AofA accou n t in g fo r 97% of t h e t ot a l.
Relat ive to 1996, op erat ing p rofit fell 4% in 1997, a s h igh er r even ues
for in got a n d a lu m in a , a lon g w it h im p r ove d cost p er for m a n ce ,
were offset by lower realized pr ices. Du e to Alcoa’s r e la t ive ly s m a ll
exp osu r e to As ian m a rket s, t h e fin a ncia l p roble m s t h e re d id n ot h ave
a significant im p act on ea r n ings in 1997. Op erat ing profitfor 1996
in crea sed 22% from 1995 du e to h igh er alu m in a pr ices wh ile cost s
in cr ea s ed at a m u ch slow er ra te .
Other Americas — Revenues of $1,818 in 1997 rose 5% from 1996 a s a
r esu lt of h igh er s ales of r ig id con t a in e r sh eet
(RCS) a n d in got a n d t h e
st a r t-u p of a n ew fac ilit y p ro du cin g a u tom ot ive ele ct r ica l com p o-
n ent s. Reve nues for 1996 were $1,726 com par ed w it h $1,780 in 1995.
Ope rat ing p rofitwas$224in 1997,$151in 1996and $333in 1995.
Th e in crea se in 1997 operat ing profit wa s d u e t o im p r ove d re su lt s
at Alcoa Alu m in io in Br az il a n d at a lu m in a op erat ion s in Su r in am e.
T h e d ec re a s e in 1996 op e ra t in g p r ofit relat ive to 1995 relates p r in-
cipa lly to h igh er cost s an d lowe r m et al p r ices at Alcoa Alu m in io’s
a lu m inu m op erat ion s.
Europe — Revenu es im p roved 14% to $2,090 in 1997, ver su s $1,841
in 1996 a n d $1,691 in 1995. Op era t in g p r ofit r os e to $100 in 1997
from $55 in 1996 an d $92 in 1995. High er sh ip m e nt s at a lu m inu m
op e rat ion s in Ita ly a n d Hu n ga r y, a lon g w it h s t ron g cost con t r ol at
op erat ion s in Great Br itain , d rove t he im p rovem ent in 1997 ope rat in g
profit . Low er 1996 r esu lt s com p a re d w it h 1995 w er e d u e t o we a k
econ om ic cond it ion s in Eu rop e in 1996, par t ially m it igated by ea r n-
in gs fr om Alco a’s acqu isit ion of Alu m ix in It aly.
Op e r a t io n s b y Se g m e n t
Alcoa’s operat ion s con s ist of t h ree segm ent s: Alu m ina an d Chem icals,
Alu m inu m Proces sin g a nd Non a lu m inu m Produ ct s.
I. Alu m in a a n d Ch e m ica ls Se gm e n t
19 9 7 19 9 6 19 9 5
Reve n u e s $ 1,961 $1,940 $1,758
Operat ing profit 415 459 307
Ap p rox im at ely t wo-t h ird s of t h e r even ue s from t h is s egm e nt a re
de r ived from sa les of a lu m in a . Reve nu e s fr om alu m in a in 1997
in crea sed 5% from 1996, wh ich r ose 13% from 1995. Sh ipm e nts we re
t h e p r im a r y fact or b eh in d t h e 1997 in cr ea se, r is in g 13% fr om 1996.
Reven u es for 1996 ros e on t h e st r en gt h of p r ice s a s sh ip m e n ts w er e
u n ch an ge d fr om 1995 levels.
Revenues fr om alu m ina-based chem ical pr odu ct s fell 3% in 1997
a s low er volu m e s m o re t h a n offs et h igh e r r ea liz ed p r ices. Reve nu e s
in 1996 ros e 3% relat ive to 1995 on h igh er volu m es, a s a st ren gth en in g
U.S. m a r ke t m o r e t h a n offs e t w e a ke r s a le s in Eu r op e .
Op erat in g p r ofit in 1997 for t h is se gm e nt wa s $415, dow n 10%
fr om 1996. T h e de cre a se wa s t h e r es u lt o f low er op e rat in g p r ofit at
AofA, p ar t ially offs et by volu m e -d r ive n im p rovem e nt s in Su r in a m e
a n d t h e U.S. In 1996, op e rat in g p r ofit of$459was up 50%from 1995,
a s t h e a lu m in a b u s in e ss b e nefite d fr om h igh e r p r ice s a n d goo d
co st co n t r o l.
In t h e 1997 s e con d qu a r t er, Alco a World Alu m in a a n d Ch e m ica ls
(AWAC) received an advan ce p aym ent of $240 related to a lon g-ter m
a lu m in a su p ply con t r act w it h Sin o Min in g Alu m in a Lt d .
(SMAL) .
Th e cont ract en t it les
SMAL to p u rch a se 400,000 m t of a lu m ina p er
yea r for 30 years.
SMAL h a s t h e op t ion t o in cr ea se its a lu m in a
pu rcha se s as it s n eeds grow. Per-ton paym ent s w ill also be m a d e
u n de r t h e t er m s of t h e agre em e nt .
In lat e Oct ob e r 1997,
AWAC a n n ou n ce d t h at it w ou ld rest a r t
it s St . Croix a lu m in a refin e r y. Th e r efin e r y h as a rat ed op e rat in g
cap ac it y of 600,000 m t a n d p r odu ct ion com m e n ce d in Febr u a r y 1998.
In Novem ber 1997,
AWAC a n n ou n ced a 440,000 m t ex pa n sion of
it s Wage ru p alu m in a refin er y in We st e r n Au st ra lia . Con st r u ct ion
is ex p e ct ed t o b e com p let e d in m id-1999.
II. Alu m in u m Pro ce s s in g Se gm e n t
19 9 7 19 9 6 19 9 5
Tot al a lu m in u m sh ipm e nt s (000 m t ) 2,956 2,841 2,582
Reve n u e s $ 8,240 $7,976 $8,034
Operat ing profit 863 774 1,015
Tot al a lu m inu m sh ip m e nt s we re up 4% fr om 1996, p r im a r ily du e t o
st r on g sh ip m en t s of en gin e er ed a n d flat-rolle d p rodu ct s. Reve nu e s
rose 3%, as th e favorable im pact of h igher sh ipm en ts wa s p ar t ia lly
offs et by lower pr ices for m ost fabr icated produ ct s. Revenu es in 1996
for th is segm ent fell 1% from 1995, reflect in g lower pr ices for m ost
produ cts, wh ile sh ipm ents increa sed 10%.
Th is segm e nt rep or ted operat ing p r ofit of $863 in 1997, a n
in crea se of 12% over 1996. The factors cont r ibu t in g to t h e in crea se
we re h igh e r volu m e s a n d im p r ove d cost p e r for m a n ce, wh ich w er e
p ar t ia lly offs et by low er fab r icat e d p rodu ct p r ice s. Produ ct s resp on-
sible for t h e im p rove d op e rat in g p r ofit in clu d e sh e et a n d plat e,
ext r u d ed p r odu ct s a n d for gin gs. Op era t in g p r ofit in 1996 t ot a le d
$774, a de cr ea s e of $241 fr om 1995. In a dd it ion t o low e r p r ice s, o t h e r
con d it ion s con t r ibu t in g t o t h e de clin e in clu de d a low er-va lu e p r odu ct
m ix a n d h igh e r r aw m a te r ia l cos ts t h at we re p ar t ia lly offs et by
bet ter cost p er for m a nce.
Th is segm en t’s sh ip m e n t s a n d r e ve n u e s a r e m a d e u p o f t h e
follow in g p rodu ct cla ss es.
19 9 7 19 9 6 19 9 5
Sh ipm e nt s (000 m t)
Flat-rolled p rodu ct s 1,392 1,357 1,380
En gin ee r ed p ro du ct s 5 62 495 45 4
Alu m inu m in got 920 901 673
Oth er a lu m inu m p rodu ct s 82 88 75
Tot al sh ip m ent s 2,956 2,841 2,582
Reve n u e s
Flat-rolled p rodu ct s $3,956 $3,920 $4,177
En gin ee r ed p ro du ct s 2 ,4 76 2,269 2,303
Alu m inu m in got 1,521 1,449 1,197
Oth er a lu m inu m p rodu ct s 287 338 357
Tot al reve nu es $8,240 $7,976 $8,034
29
Pacific— Alcoa’s p r im a r y op erat ion s in t h e Pacific r egion a re t h os e
of Alcoa of Au st ra lia (AofA). In 1997, reve nues for th is region tot aled
$2,222, of wh ich 84% w er e at t r ibu t able t o AofA. Op erat in g p rofit for
1997 a m ou n t ed t o $482, w it h AofA accou n t in g fo r 97% of t h e t ot a l.
Relat ive to 1996, op erat ing p rofit fell 4% in 1997, a s h igh er r even ues
for in got a n d a lu m in a , a lon g w it h im p r ove d cost p er for m a n ce ,
were offset by lower realized pr ices. Du e to Alcoa’s r e la t ive ly s m a ll
exp osu r e to As ian m a rket s, t h e fin a ncia l p roble m s t h e re d id n ot h ave
a significant im p act on ea r n ings in 1997. Op erat ing profitfor 1996
in crea sed 22% from 1995 du e to h igh er alu m in a pr ices wh ile cost s
in cr ea s ed at a m u ch slow er ra te .
Other Am ericas — Revenu es of $1,818 in 1997 rose 5% from 1996 a s a
r esu lt of h igh er s ales of r ig id con t a in e r sh eet
(RCS) a n d in got a n d t h e
st a r t-u p of a n ew fac ilit y p ro du cin g a u tom ot ive ele ct r ica l com p o-
n ent s. Reve nues for 1996 were $1,726 com par ed w it h $1,780 in 1995.
Ope rat ing p rofitwas$224in 1997,$151in 1996and $333in 1995.
Th e in crea se in 1997 operat ing profit wa s d u e t o im p r ove d re su lt s
at Alcoa Alu m in io in Br az il a n d at a lu m in a op erat ion s in Su r in am e.
T h e d ec re a s e in 1996 op e ra t in g p r ofit relat ive to 1995 relates p r in-
cipa lly to h igh er cost s an d lowe r m et al p r ices at Alcoa Alu m in io’s
a lu m inu m op erat ion s.
Europe — Revenu es im proved 14% to $2,090 in 1997, ver su s $1,841
in 1996 a n d $1,691 in 1995. Op era t in g p r ofit r os e to $100 in 1997
from $55 in 1996 an d $92 in 1995. High er sh ip m e nt s at a lu m inu m
op e rat ion s in Ita ly a n d Hu n ga r y, a lon g w it h s t ron g cost con t r ol at
op erat ion s in Great Br itain , d rove t he im p rovem ent in 1997 ope rat in g
profit . Low er 1996 r esu lt s com p a re d w it h 1995 w er e d u e t o we a k
econ om ic cond it ion s in Eu rop e in 1996, par t ially m it igated by ea r n-
in gs fr om Alco a’s acqu isit ion of Alu m ix in It aly.
Op e r a t io n s b y Se g m e n t
Alcoa’s operat ion s con s ist of t h ree segm ent s: Alu m ina an d Chem icals,
Alu m inu m Proces sin g a nd Non a lu m inu m Produ ct s.
I. Alu m in a a n d Ch e m ica ls Se gm e n t
19 9 7 19 9 6 19 9 5
Reve n u e s $ 1,961 $1,940 $1,758
Operat ing profit 415 459 307
Ap p rox im at ely t wo-t h ird s of t h e r even ue s from t h is s egm e nt a re
de r ived from sa les of a lu m in a . Reve nu e s fr om alu m in a in 1997
in crea sed 5% from 1996, wh ich r ose 13% from 1995. Sh ipm e nts we re
t h e p r im a r y fact or b eh in d t h e 1997 in cr ea se, r is in g 13% fr om 1996.
Reven u es for 1996 ros e on t h e st r en gt h of p r ice s a s sh ip m e n ts w er e
u n ch an ge d fr om 1995 levels.
Revenues fr om alu m ina-based chem ical pr odu ct s fell 3% in 1997
a s low er volu m e s m o re t h a n offs et h igh e r r ea liz ed p r ices. Reve nu e s
in 1996 ros e 3% relat ive to 1995 on h igh er volu m es, a s a st ren gth en in g
U.S. m a r ke t m o r e t h a n offs e t w e a ke r s a le s in Eu r op e .
Op erat in g p r ofit in 1997 for t h is se gm e nt wa s $415, dow n 10%
fr om 1996. T h e de cre a se wa s t h e r es u lt o f low er op e rat in g p r ofit at
AofA, p ar t ially offs et by volu m e -d r ive n im p rovem e nt s in Su r in a m e
a n d t h e U.S. In 1996, op e rat in g p r ofit of$459was up 50%from 1995,
a s t h e a lu m in a b u s in e ss b e nefite d fr om h igh e r p r ice s a n d goo d
co st co n t r o l.
In t h e 1997 s e con d qu a r t er, Alco a World Alu m in a a n d Ch e m ica ls
(AWAC) received an advan ce p aym ent of $240 related to a lon g-ter m
a lu m in a su p ply con t r act w it h Sin o Min in g Alu m in a Lt d .
(SMAL) .
Th e cont ract en t it les
SMAL to p u rch a se 400,000 m t of a lu m ina p er
yea r for 30 years.
SMAL h a s t h e op t ion t o in cr ea se its a lu m in a
pu rcha se s as it s n eeds grow. Per-ton paym ent s w ill also be m a d e
u n de r t h e t er m s of t h e agre em e nt .
In lat e Oct ob e r 1997,
AWAC a n n ou n ce d t h at it w ou ld rest a r t
it s St . Croix a lu m in a refin e r y. Th e r efin e r y h as a rat ed op e rat in g
cap ac it y of 600,000 m t a n d p r odu ct ion com m e n ce d in Febr u a r y 1998.
In Novem ber 1997,
AWAC a n n ou n ced a 440,000 m t ex pa n sion of
it s Wage ru p alu m in a refin er y in We st e r n Au st ra lia . Con st r u ct ion
is ex p e ct ed t o b e com p let e d in m id-1999.
II. Alu m in u m Pro ce s s in g Se gm e n t
19 9 7 19 9 6 19 9 5
Tot al a lu m in u m sh ipm e nt s (000 m t ) 2,956 2,841 2,582
Reve n u e s $ 8,240 $7,976 $8,034
Operat ing profit 863 774 1,015
Tot al a lu m inu m sh ip m e nt s we re up 4% fr om 1996, p r im a r ily du e t o
st r on g sh ip m en t s of en gin e er ed a n d flat-rolle d p rodu ct s. Reve nu e s
rose 3%, as th e favorable im pact of h igher sh ipm en ts wa s p ar t ia lly
offs et by lower pr ices for m ost fabr icated produ ct s. Revenu es in 1996
for th is segm ent fell 1% from 1995, reflect in g lower pr ices for m ost
produ cts, wh ile sh ipm ents increa sed 10%.
Th is segm e nt rep or ted operat ing p r ofit of $863 in 1997, a n
in crea se of 12% over 1996. The factors cont r ibu t in g to t h e in crea se
we re h igh e r volu m e s a n d im p r ove d cost p e r for m a n ce, wh ich w er e
p ar t ia lly offs et by low er fab r icat e d p rodu ct p r ice s. Produ ct s resp on-
sible for t h e im p rove d op e rat in g p r ofit in clu d e sh e et a n d plat e,
ext r u d ed p r odu ct s a n d for gin gs. Op era t in g p r ofit in 1996 t ot a le d
$774, a de cr ea s e of $241 fr om 1995. In a dd it ion t o low e r p r ice s, o t h e r
con d it ion s con t r ibu t in g t o t h e de clin e in clu de d a low er-va lu e p r odu ct
m ix a n d h igh e r r aw m a te r ia l cos ts t h at we re p ar t ia lly offs et by
bet ter cost p er for m a nce.
Th is segm en t’s sh ip m e n t s a n d r e ve n u e s a r e m a d e u p o f t h e
follow in g p rodu ct cla ss es.
19 9 7 19 9 6 19 9 5
Sh ipm e nt s (000 m t)
Flat-rolled p rodu ct s 1,392 1,357 1,380
En gin ee r ed p ro du ct s 5 62 495 45 4
Alu m inu m in got 920 901 673
Oth er a lu m inu m p rodu ct s 82 88 75
Tot al sh ip m ent s 2,956 2,841 2,582
Reve n u e s
Flat-rolled p rodu ct s $3,956 $3,920 $4,177
En gin ee r ed p ro du ct s 2 ,4 76 2,269 2,303
Alu m inu m in got 1,521 1,449 1,197
Oth er a lu m inu m p rodu ct s 287 338 357
Tot al reve nu es $8,240 $7,976 $8,034