Alcoa 1998 Annual Report Download - page 4

2
To Alcoa Shareholders
Paul O’Neill, Alcoa chairman
and chief executive officer, in the
atrium of the recently completed
Alcoa Corporate Center.
Earnings in 1998 totaled $853 million
with revenues of $15.3 billion and a
return on equity of 16.3%.
It was a good year for Alcoa by these
standard financial measures – especially so
because the results were achieved in
spite of a 20% year-to-year price decline
for aluminum ingot.
But the truly great news behind the
1998 financial results is the progress we have
made over the last decade in raising Alcoa’s
underlying value-generating capability, which
shows through in the 1998 results.
We are confident we can continue to
improve our performance capability and,
accordingly, when we announced fourth
quarter 1998 and full-year results we also
announced we would increase the dividend
by 50%, split the stock two for one, and
renew our share repurchase program.
Foundations for Success
In assessing our performance in 1998, you
might very well attribute our success to
the two major acquisitions we completed in
the year – Inespal, the Spanish aluminum
company that brought with it $1 billion in
revenues and 4,000 employees, and Alumax,
the $3 billion sales company with 15,000
employees and 70 operating locations.
Certainly, both are important additions to
the Alcoa system, bringing excellent people,
adding capability to serve more customers
worldwide, contributing technology, product
lines and earnings.
But to see our success in individual mile-
stone events is to miss the important transfor-
mation that has occurred in our company.
Wall Street financial analysts are fascinated
by the change and often ask: how have you
done this, and how long will it take for the
competition to catch up?