Alcoa 1999 Annual Report Download - page 32

13.1
13.3
15.3
16.3
96 97 98 99
Revenues
by Segment
billions of dollars
2.0
1.6
1.9
4.1
3.5
2.0
1.6
2.1
4.2
3.4
1.8
2.1
3.1
4.9
3.4
1.9
2.2
3.7
5.1
3.4
Alumina & Chemicals
Primary Metals
Engineered Products
Flat-rolled Products
Other
Alumina
Production
thousands of
metric tons
10,578
10,644
11,048
12,938 13,273
9695 97 98 99
I. Alumina and Chemicals
1999 1998 1997
Third-party alumina shipments (mt) 7,054 7,130 7,223
Third-party sales $1,842 $1,847 $1,978
Intersegment sales 925 832 634
Total sales $2,767 $2,679 $2,612
After-tax operating income $ 307 $ 318 $ 302
This segment’s activities include the mining of bauxite, which is
then refined into alumina. Alumina is sold to internal and external
customers worldwide or is processed into industrial chemical prod-
ucts. Approximately two-thirds of the third-party sales from this
segment are from alumina.
In 1999, third-party sales of alumina were up 5% compared with
1998. Shipments fell 1% while realized prices rose 6%. For 1998,
third-party sales of alumina fell 14% from 1997, as realized prices
fell 13% and shipments fell 1%. Lower third-party shipments, as
a consequence of higher intersegment sales in 1999 and 1998, were a
direct result of the Alumax acquisition. Previously, sales of alumina
to Alumax were classified as third-party revenues; these sales are now
recorded as intersegment. Including intersegment sales, shipments
were down slightly in 1999 and up in 1998.
Third-party sales of alumina-based chemical products were down
3% in 1999, as the divestiture of Alcoa Specialty Chemicals in 1998,
lower prices and a lower value-added mix more than offset higher
shipments. In 1998, sales were unchanged compared with 1997, as
higher shipments, aided by acquisitions, were offset by lower prices.
Segment
ATOI for 1999 fell 3% from 1998 to $307. Alumina ATOI
fell 4%, as intersegment sales comprised a higher percentage of total
sales. Offsetting a portion of this decline was improved cost perfor-
mance in Brazil, along with lower energy and raw material costs at
operations in Australia and the U.S., respectively. Chemicals
ATOI for
1999 rose 13%, as the impact of lower third-party sales was more
than offset by cost improvements relating to productivity enhance-
ments at North American operations and lower production costs.
Segment
ATOI in 1998 rose 5% over 1997, as lower operating costs
and the impact of the Inespal acquisition were partly offset by lower
realized prices.
In 1999, Alcoa completed the expansion of its Wagerup alumina
refinery in Australia. This expansion, which increases Wagerup’s
capacity by 440,000 mt to a total plant capacity of 2.2 million mt
peryear,wascompletedontimeandonbudget.
II. Primary Metals
1999 1998 1997
Third-party aluminum shipments (mt) 1,442 1,392 940
Third-party sales $2,241 $2,105 $1,600
Intersegment sales 2,793 2,509 1,883
Total sales $5,034 $4,614 $3,483
After-tax operating income $ 535 $ 372 $ 399
The focus of this segment is Alcoa’s worldwide smelter system.
Primary Metals receives alumina from the Alumina and Chemicals
segment and produces aluminum ingot to be used by Alcoa’s fabricat-
ing businesses, as well as sold to outside customers. Other products
produced and sold by this segment include powder and scrap.