Alcoa 2012 Annual Report Download - page 43

Alcoa may not be able to successfully realize goals established in each of its four business segments, at the levels
or by the dates targeted for such goals.
Alcoa established targets for each of its four major business segments, including the following:
• by 2015, driving the alumina business down into the first quartile of the industry cost curve and realizing
profit levels (per mt) that are beyond its recent historic norms;
• by 2015, driving the smelting business down into the second quartile of the industry cost curve and
increasing profitability (per mt) beyond the Company’s past ten-year average;
• by 2013, increasing the revenues of the Global Rolled Products segment by $2.5 billion by growing 50%
faster than the market and achieving performance levels above its historic norms; and
• by 2013, increasing the revenues of the Engineered Products and Solutions segment by $1.6 billion, through
market growth, new product introductions, and share gains.
There can be no assurance that any of these initiatives will be completed as anticipated. Market conditions or other
factors may prevent Alcoa from accomplishing its goals at the levels or by the dates targeted, if at all, and failure to do
so may have a material adverse effect on our business, financial condition, results of operations or the market price of
our securities.
Alcoa may not be able to realize expected benefits from its growth projects or from its streamlining portfolio
strategy.
Alcoa’s growth projects include the joint venture with Ma’aden in Saudi Arabia, the completed São Luís refinery
expansion, the Juruti bauxite mine and the ongoing Estreito hydroelectric power project in Brazil, the automotive
expansion at the Davenport, Iowa fabrication plant and the China and Russia growth projects. Although management
believes that these projects will be beneficial to Alcoa, there is no assurance that anticipated benefits will be realized.
Adverse factors may prevent Alcoa from realizing the benefits of its growth projects, including unfavorable global
economic conditions, currency fluctuations, or unexpected delays in target timelines.
Alcoa has made, and may continue to plan and execute, acquisitions and divestitures and take other actions to grow or
streamline its portfolio. Alcoa may face barriers to exit from unprofitable businesses or operations, including high exit
costs or objections from various stakeholders. In addition, Alcoa may retain unforeseen liabilities for divested entities
if the buyer fails to honor all commitments. Acquisitions also present significant challenges and risks, including the
effective integration of the business into the Company and unanticipated costs and liabilities, and the Company may be
unable to manage acquisitions successfully. There can be no assurance that acquisitions and divestitures will be
undertaken or completed in their entirety as planned or that they will be beneficial to Alcoa.
Joint ventures and other strategic alliances may not be successful.
Alcoa participates in joint ventures and has formed strategic alliances and may enter into other similar arrangements in
the future. For example, in December 2009, Alcoa formed a joint venture with Ma’aden, the Saudi Arabian Mining
Company, to develop a fully integrated aluminum complex (including a bauxite mine, alumina refinery, aluminum
smelter and rolling mill) in the Kingdom of Saudi Arabia. In November 2012, Alcoa and China Power Investment
Corporation (CPI) established a joint venture company to produce high-end fabricated aluminum products in China.
Although the Company has, in connection with the Saudi Arabia joint venture and its other existing joint ventures and
strategic alliances, sought to protect its interests, joint ventures and strategic alliances inherently involve special risks.
Whether or not Alcoa holds majority interests or maintains operational control in such arrangements, its partners may:
• have economic or business interests or goals that are inconsistent with or opposed to those of the Company;
• exercise veto rights so as to block actions that Alcoa believes to be in its or the joint venture’s or strategic
alliance’s best interests;
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