Alcoa 2014 Annual Report Download - page 7

2014 FINANCIAL PERFORMANCE*
37
42 43 44
37 40 40 40 36 34 35 36
30 32 29 31 28 30 33 32 28
4Q09
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
EVEN 1 DAY LOWER 6 DAYS LOWER 2 DAYS LOWER EVEN
9 day reduction since 4Q09
SUSTAINED WORKING CAPITAL EXCELLENCE
2013 2014
LME Currency Volume Price/Mix Productivity Energy Cost Increases/
Other
Raw
Materials
+$107 MARKET +$1,113 PERFORMANCE -$461 COST HEADWINDS
$ in millions
357 16 123 64 292
757 31 48 540
1,116
STRONG PERFORMANCE DRIVES EARNINGS GROWTH
2009 2010 2011 2012 2013
EPS
(
28%
)
GRP
(
23%
)
GPP
(
43%
)
OTHER
(
6%
)
2,410
742
1,099 1,291 1,117
2014
1,194
338
279
512
65
$ in millions
PRODUCTIVITY 2009–2014
All figures are pretax and pre-minority interest. 2009–2010 represents net productivity. 2011–2013 represents gross productivity. EPS: Engineered
Products and Solutions; GRP: Global Rolled Products; GPP: Global Primary Products represents the Alumina and Primary Metals segments combined.
5
Alcoa’s 2014 operating performance was the strongest since 2008, demonstrating how the Company’s
transformation is driving profitability. Excluding the impact of special items, performance growth drove
2014 net income of $1.1 billion, or $0.92 per share, up slightly more than threefold from 2013.
Through the power of Alcoa’s Degrees of Implementation program, which is the Company’s disciplined
execution methodology for moving from ideas to cash, our businesses generated $1.2 billion in productivity
savings. This result exceeded an $850 million annual target and improved total productivity savings since
2008 to $7.9 billion.
Alcoa also managed growth capital expenditures of $484 million against a $500 million annual target; controlled
sustaining capital expenditures of $735 million against a $750 million annual target; and invested $91 million in
our Saudi Arabia joint venture project against a $125 million annual target.
Additionally, we continued to manage working capital diligently in 2014, resulting in average days working
capital at 28 days in the fourth quarter, even with the fourth quarter of 2013, while supporting growth
initiatives related to the automotive and aerospace end markets we serve. We have reduced average days
working capital by nine days since the fourth quarter of 2009.
As a result of our disciplined execution, we met our overarching goal to be free cash flow positive for the fifth
consecutive year, ending 2014 with free cash flow totaling $455 million on cash from operations of $1.7 billion.
* See Calculation of Financial Measures at the end of this report for reconciliations of certain non-GAAP financial measures
(adjusted income, free cash flow, days working capital and adjusted EBITDA).