Alcoa 2015 Annual Report Download - page 95

Third-party sales for this segment increased 4% in 2014 compared with 2013, primarily due to higher volumes and the
acquisition of Firth Rixson ($81—see above). The higher volumes were mostly related to the aerospace (commercial)
and commercial transportation end markets, somewhat offset by lower volumes in the industrial gas turbine end
market.
ATOI for the Engineered Products and Solutions segment increased $16 in 2015 compared with 2014, principally the
result of net productivity improvements across most businesses, a positive contribution from inorganic growth, and
overall higher volumes in this segment’s organic businesses. These positive impacts were partially offset by
unfavorable price/product mix, higher costs related to growth projects, and net unfavorable foreign currency
movements, primarily related to a weaker euro.
ATOI for this segment climbed $10 in 2014 compared with 2013, mainly due to net productivity improvements across
all businesses and overall higher volumes, partially offset by higher costs, primarily labor, and unfavorable product
mix.
In 2016, demand in the commercial aerospace end market is expected to remain strong, driven by significant order
backlog. Also, third-party sales will include a positive impact due to a full year of sales related to the acquisitions of
RTI and TITAL. Additionally, net productivity improvements are anticipated while pricing pressure across all markets
is expected.
Transportation and Construction Solutions
2015 2014 2013
Third-party sales $1,882 $2,021 $1,951
ATOI $ 166 $ 180 $ 167
This segment represents a portion of Alcoa’s downstream operations and produces products that are used mostly in the
nonresidential building and construction and commercial transportation end markets. Such products include integrated
aluminum structural systems, architectural extrusions, and forged aluminum commercial vehicle wheels, which are
sold directly to customers and through distributors. A small part of this segment also produces aluminum products for
the industrial products end market. Generally, the sales and costs and expenses of this segment are transacted in the
local currency of the respective operations, which are mostly the U.S. dollar, the euro, and the Brazilian real.
Third-party sales for the Transportation and Construction Solutions segment decreased 7% in 2015 compared with
2014, primarily driven by unfavorable foreign currency movements, principally caused by a weaker euro and Brazilian
real, and lower volume related to the building and construction end market, somewhat offset by higher volume related
to the commercial transportation end market.
Third-party sales for this segment increased 4% in 2014 compared with 2013, mostly the result of higher volume
related to the commercial transportation and building and construction end markets, somewhat offset by lower volume
in the industrial products and market.
ATOI for the Transportation and Construction Solutions segment declined $14 in 2015 compared with 2014, mainly
due to higher costs, net unfavorable foreign currency movements, primarily related to a weaker euro and Brazilian real,
and unfavorable price/product mix. These negative impacts were mostly offset by net productivity improvements
across all businesses.
ATOI for this segment improved $13 in 2014 compared with 2013, principally attributable to net productivity
improvements across all businesses and overall higher volumes, partially offset by unfavorable product mix and higher
costs, primarily labor.
In 2016, the non-residential building and construction end market is expected to improve through growth in North
America but will be slightly offset by overall weakness in Europe. Also, North America build rates in the commercial
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