Alcoa 1999 Annual Report Download - page 34

2,582
2,841
2,956
3,951 4,478
9695 97 98 99
Aluminum Product
Shipments
thousands of metric tons
1,909 1,940 2,036
2,584
3,067
673
901 920
1,367
1,411
Third-Party Ingot
Fabricated Products
LME by three to six months, resulting in RCS prices falling year over
year. For the industry as a whole, 1999 shipments of beverage cans by
U.S. can manufacturers fell .7% from 1998. In 1998, these shipments
rose 2.2%. Third-party sales were essentially unchanged in 1998 from
1997, as were shipments and prices.
Mill products third-party sales were up 14% from 1998, as ship-
ments rose 32% and average prices fell 14%. Higher shipments in
the U.S. and the impact of acquisitions were partly offset by lower
shipments in Latin America. Average realized prices fell in part due
to acquisitions, as post-Alumax, lower value-added products made up
a higher percentage of total shipments. Third-party sales from mill
products in 1998 were up 21% over 1997. Shipments, aided by acqui-
sitions, increased 23%, while prices fell 2%.
ATOI forFlat-RolledProductsfell8%in1999,ashigherrevenues
and cost reductions were overshadowed by lower prices and lower
equity earnings.
RCS ATOI fell14%,asa$16declineinequityearnings
from Kaal, a 50%-owned joint venture that operates
RCS facilities
in Australia and Japan, had a negative impact on financial perfor-
mance.ThedeclineinKaal’searningswasprimarilytheresultof
lower revenues from Japan. Lower prices, $3 of higher advertising
costsandalessprofitablemix,partiallyoffsetby$7ofcostimprove-
ments related to purchased materials, also had a negative impact
on
RCS ATOI .Millproducts ATOI fell 9%, as improved results for
U.S. operations were more than offset by weaker performance in
Latin America and Europe. U.S. mill products results were aided by
acquisitions, which increased volumes, along with $11 of improved
productivity and cost performance. A shift in mix towards lower
value-added products offset a portion of these gains. In Europe and
Latin America, lower prices were partly offset by productivity and
cost improvements. Partly offsetting the decline in
RCS and mill
products
ATOI were improved results from foil operations and the
shutdown of Alcoa Memory Products in 1999.
In 1998, ATOI for Flat-Rolled Products rose 14%, as increases
from mill products and foil were partially offset by declines in
RCS .
RCS ATOI was down, as higher costs for labor and services reduced
margins. Mill products ATOI rose, as acquisitions and higher prices
for products used in the transportation market offset losses related
to the production and sale of computer memory disks.
IV. Engineered Products
1999 1998 1997
Third-party aluminum shipments (mt) 989 729 441
Third-party sales $3,728 $3,110 $2,077
Intersegment sales 26 11 9
Total sales $3,754 $3,121 $2,086
After-tax operating income $180 $183 $100
This segment includes hard and soft alloy extrusions, aluminum
forgings, rod and bar. These products serve the transportation,
construction and distributor markets. Third-party shipments for this
segment were up 36% in 1999, generating a 20% increase in revenues.
In 1998, third-party shipments rose 65% over 1997, resulting in a 50%
increase in revenues. Acquisitions and higher shipments of forged
wheels, partly offset by the 1998 sale of Alcotec, a wire fabricator,
were responsible for the increase in shipments. Average realized
prices for Engineered Products for the 1999 period fell 12%, to $1.71