Alcoa 2003 Annual Report Download - page 33

an electrical outage at the Alumar smelter in Brazil. Intersegment
sales increased 17% due to higher realized prices and higher
volumes. Third-party sales in 2002 decreased 8% compared with
2001 as higher shipments were more than offset by lower realized
prices and the lack of significant power sales resulting from produc-
tion curtailments at plants located in the northwestern U.S. in 2001.
Intersegment sales decreased 7% due to lower realized prices.
ATOI for this segment was relatively flat in 2003 compared
with 2002 as higher realized prices and ongoing cost savings
were substantially offset by higher costs for energy, raw materials,
andemployeebenefits, and the impact of unfavorable foreign
currency exchange movements.
ATOI for this segment decreased
28%in2002compared with 2001.The decline was primarily due
to lower realized prices and the lack of significant power sales in
2002. These decreases were somewhat offset by increased volumes
and lower foreign taxes.
During 2003, Alcoa announced capacity curtailments of
57,000 mt at Intalco in Ferndale, WA and 60,000 mt at Massena,
NY due tohigherenergy costs. As a result, Alcoa has approximately
562 ,000 mt per year (mtpy) of idlecapacityonabase capacity
of 4,020,000 mtpy. Also during 2003, Alcoa began detailed design
of a 322,000-mt smelter in Iceland and continued to make progress
on plans to expand smelting opportunities in China, Canada, and
Bahrain. Alcoa continued to invest in energy projects in Brazil and
Rockdale, TX.
Aluminum Production
thousands of metric tons
99
2,851
00
3,539
01
3,488
02
3,500
03
3,508
Flat-Rolled Products
2003 2002 2001
Third-party aluminum shipments (mt) 1,819 1,774 1,818
Third-party sales $4,815 $4,640 $4,999
Intersegment sales 66 68 64
To t a l s ales $4,881 $4,708 $5,063
ATOI $ 221 $ 220 $ 262
This segment’s principal business is the production and sale of
aluminum plate, sheet, and foil. This segment includes rigid container
sheet (RCS) ,which is sold directlytocustomers in the packaging
and consumer market and is used to produce aluminum beverage
cans. Seasonal increases in RCS sales are generallyexperienced
in the second and third quarters of the year. This segment also
includes sheet and plate used in the transportation, building and
31
more than offset increased shipments. Third-party sales of alumina-
based chemical products were down 12% in 2002 compared to 2001
primarily due to lower volumes.
ATOI for this segment rose 32% in 2003 compared with 2002
primarily due to higher realized prices and higher volumes, which
were somewhat offset by higher energy costs and unfavorable foreign
currency exchange movements.
ATOI in 2002 fell 33% compared
with 2001, primarily due to lower realized prices, partially offset
by increasedvolumes and cost improvements.
Alcoa continued to make long-term investments to improve its
world-class position in alumina refining. Through
AWAC ,Alcoa’s
global alliance with Alumina Limited, the company moved forward
in 2003 on its plan to add 1,100,000 mt (Alcoa’s share is 862,500 mt)
of annual capacity at its alumina refineries by completing a 250,000
mt (Alcoa’s share is 125,000 mt) expansion inJamaica, and proceed-
ing withplanstoadd250,000mt(Alcoa’s share is 137,500 mt) in
Suriname, and 600,000 mt in Western Australia by 2005.
Alumina Production
thousands of metric tons
99
13,273
00
13,968
01
12,527
02
13,027
03
13,841
Primary Metals
2003 2002 2001
Aluminum production (mt) 3,508 3,500 3,488
Third-party aluminum shipments (mt) 1,952 2,073 1,873
Alcoa’s average realized price per
pound for aluminum ingot $ 0.70 $ 0.66 $ 0.72
Third-party sales $3,229 $3,174 $3,432
Intersegment sales 3,098 2,655 2,849
To t a l s ales $6,327 $5,829 $6,281
ATOI $ 657 $ 650 $ 905
This segment consists of Alcoa’s worldwide smelter system. Primary
Metals receives alumina primarily from the Alumina and Chemicals
segment and produces aluminum ingot to be used by Alcoa’s fabri-
cating businesses,aswell as sold to external customers, aluminum
traders, and commodity markets. Results from the sale of aluminum
powder, scrap, and excess power are also included in this segment,
as well as the results of aluminum derivative contracts. Aluminum
ingot produced by Alcoa and used internally is transferred to other
segments at prevailing market prices. The sale of ingot represents
approximately 90% of this segment’s third-party sales.
Third-party sales for the Primary Metals segment increased 2%
in 2003 compared with 2002 as higher realized prices morethan
offset lower third-party shipments and the negative impact of