Alcoa 2015 Annual Report Download - page 9

2015 Financial Performance*
Net Income Excluding Special Items
Productivity 2009–2015
All fi gures are pretax and pre-minority interest. 2009–2010 represents net productivity. 2011–2015 represents gross productivity. EPS: Engineered
Products and Solutions; TCS: Transportation and Construction Solutions; GRP: Global Rolled Products; GPP: Global Primary Products represents the
Alumina and Primary Metals segments combined.
In 2015, Alcoa’s strong productivity and favorable currency impacts were more than offset by lower metal prices and
cost increases. Excluding the impact of special items, Alcoa reported 2015 net income of $787 million, or $0.56 per share.
To strengthen the Company, Alcoa announced business
improvement programs across its portfolios: the Value-Add
and Upstream businesses will deliver $650 million and $600
million, respectively, in productivity and margin improvement
in 2016. This includes implementation of an overhead reduction
program across the Company, of which $100 million in benefi ts is
expected to be realized in 2016, and $225 million over two years.
In 2015, Alcoa generated $1.2 billion in productivity savings, which
exceeded a $900 million annual target.
Alcoa also managed return-seeking capital of $602 million
against a $750 million annual target; controlled sustaining capital
expenditures of $605 million against a $725 million annual target;
and attained a debt-to-adjusted EBITDA ratio of 2.80, slightly above
the target range (2.25 to 2.75) as a result of an unfavorable impact
related to the mid-year acquisition of RTI International Metals.
Additionally, Alcoa’s cash from operations totaled $1.6 billion, which
drove free cash fl ow of $402 million. As a result, Alcoa fi nished the
year with cash on hand of $1.9 billion.
In 2015, Alcoa continued to make organic and inorganic
investments in support of growth within the aerospace and
automotive end markets. Including inorganic investments, average
days working capital in fourth quarter 2015 increased 15 days
compared to the fourth quarter of 2014. We continue to focus
on reducing days working capital as we work to integrate the
acquisitions.
* See Calculations of Financial Measures at the end of this report for
reconciliations of certain non-GAAP fi nancial measures (adjusted income,
adjusted EBITDA, free cash fl ow, and days working capital).
05
787
2014 2015
Metal Price Alumina Price
Index / Spot
Currency Volume Price/Mix Productivity Energy Cost Increases/
Other
Raw
Materials
-$469 MARKET +$766 PERFORMANCE -$626 COST HEADWINDS
$ in millions
1,116 734
63
328 93 76
749 177 2447
112
1,199
299
205
532
51
2009 2010 2011 2012 2013
EPS (25%)TCS (9%)GRP (17%)GPP (45%)CORP (4%)
742
1,099 1,291 1,117
2014 2015
1,194
2,410
$ in millions