Alcoa 2003 Annual Report Download - page 25

23
Commercial Transportation 5.1% $1.1 billion
Alcoa segments that sell products to this market:
Flat-Rolled Products, Engineered Products, Other
• Alcoa’s revenues in this market are
from an array of fabricated alu-
minum products for commercial
and residential applications, as
well as vinyl extrusions and injec-
tion moldings for new homes and
remodeling.
• Low mortgage rates in the U.S.
spurred record highs for housing
starts, which were up 8.4% over
2002, and for new home sales,
rising 11.5%, a record level.
U.S. Commerce Dept., National
Association of Home Builders
• Home improvement expenditures
in the U.S. grew 6% over 2002.
U.S. Census
Building and Construction 10.2% $2.2 billion
Alcoa segments that sell products to this market:
Flat-Rolled Products, Engineered Products, Other
• Alcoa is the world’s largest pro-
ducer of alumina, a powdery oxide
of aluminum refined from bauxite
ore and used to produce aluminum
and alumina-based chemicals.
Alcoa’s 2003 alumina production
rose 6.2% to approximately 14
million metric tons. In 2003, 53%
of Alcoa World Alumina and
Chemicals’ refinery production
was supplied to outside customers.
• Aluminum ingot is an internation-
ally produced, priced, and traded
commodity whose principal trad-
ing market is the London Metal
Exchange, or LME.
• Worldwide primary aluminum
capacity in 2003 was estimated at
30.4 million mtpy, of which 8%
was idle. CRU Alcoa
• Alcoa’s worldwide primary
aluminum capacity is 4.0 million
mtpy, of which 14% is idle.
Aluminum and Alumina 24.2% $5.2 billion
Alcoa segments that sell products to this market:
Primary Metals, Alumina and Chemicals
• Alcoa’s revenues from this market
include sales of aluminum sheet,
plate, and extrusions to distribu-
tors and sales of products and
services for telecommunications
and power generation.
• In 2003, U.S. fabricated aluminum
sales were relatively unchanged
compared to 2002. NAAD
• Projected build rates for heavy-
duty gas turbines in the U.S. and
Europe could drop to as low as
one-third in 2004 of its peak in
2001. Most of the decline is due to
power plant overcapacity. General
Electric, Siemens Power Generation
Industrial Products and Other 13.0% $2.8 billion
Alcoa segments that sell products to this market:
Flat-Rolled Products, Engineered Products, Other
North American Heavy Truck
Production
thousands
Source: ACT Research
0399 00 01 02
0
50
100
150
200
250
300
350
Aluminum Wheel Penetration in
Heavy-Duty Trucks
percent
Source: Alcoa
North
America
Western
Europe
Japan
0399 00 01 02
0
10
20
30
40
50
60
• Alcoa revenues in this market
come from sales of aluminum
sheet, extrusions, and components
such as fasteners, wire harnesses,
and wheels for medium/heavy-
duty trucks and trailers; and buses,
boats, motorcycles, recreational
vehicles, etc.
• Following a year buoyed by “buy-
aheads” in anticipation of new
engine emissions standards, 2003
build rates were 5% lower. Build
rates in 2004 are expected to be
more than 20% above 2003.
• European legislation focused at
enforcing load limits will provide
a catalyst for weight reduction;
however, build rates are expected
to be flat in 2004. Asia build rates,
following a modest increase,
should also be flat.
• Alcoa is well-positioned to lever-
age global opportunities with its
complete lineup of weight-saving
wheels. In addition, new engine
emission standards to be imple-
mented in 2007 will provide a
similar boost for light-weighting
solutions similar to what occurred
in 2002.
New Nonresidential Construction
Annual Growth Rates
percent
Source: U.S. Census, Euroconstruct
U.S.
Europe
0399 00 01 02
-25
-15
-20
-10
-5
0
5
U.S. Repair & Improvement
Expenditures
billions of dollars
Source: U.S. Census
110
130
150
170
9594 96 97 98 99 00 01 02 03
Worldwide Aluminum Ingot Inventory
millions of metric tons
Source: LME, IAI
Producers
LME Warehouse
0
500
1,000
1,500
2,000
2,500
9594 96 97 98 99 00 01 02 03
Western World Alumina Demand
millions of metric tons
Source: CRU Alcoa
0399 00 01 02
0
10
20
30
40
50
Total
imports
into CIS
and China
Nonmetal-
lurgical
alumina
Smelter-
grade
alumina
North American Telecommunications
Capital Expenditures
billions of dollars
Source: RHK, Inc.
0399 00 01 02
0
20
40
60
80
100