Repositioning and roadmap to achieving 2016 business targets in focus at Alcoa 2014 Investor Day
Alcoa (NYSE:AA) executives today said that they continue to aggressively
reposition the Company and that they are on track to successfully
deliver against business targets introduced last year. Alcoa is
transforming its portfolio by building out its innovative,
multi-material value-add businesses to capture profitable growth and by
creating a globally competitive commodity business. Alcoa hosted its
2014 Investor Day event at the New York Stock Exchange.
“Alcoa’s transformation is in high gear and driving sustainable
shareholder value,” said Klaus Kleinfeld, Alcoa Chairman and Chief
Executive Officer. “With our strong portfolio of value-add businesses we
are building a lightweight, multi-material innovation powerhouse, and at
the same time we’re creating a globally competitive commodity business.
This is a winning formula.”
Operationally, Alcoa continues to drive process improvements and
procurement savings across the business. Productivity gains totaled $862
million through the third quarter and are expected to reach $1.1 billion
for the full year, exceeding the $850 million 2014 annual target.
Additionally, through continued operational discipline, Alcoa is on
track to achieve its 2014 annual financial targets.
In addition, Alcoa’s four business segments, Engineered Products and
Solutions, Global Rolled Products, and Alumina and Primary Metals
together comprising Global Primary Products, updated their progress
against business targets for the 2013 to 2016 time period, with the
following highlights:
Engineered Products and Solutions
-
Innovation to drive continued profitable growth:
-
$125 million of organic aerospace investments to expand jet engine
offerings; on track for completion by fourth quarter 2015 -
Opened world’s largest aluminum-lithium casthouse for advanced
aircraft; $100 million in revenues already contracted for 2017 -
Wheels business targeting $300 million of incremental revenues
between 2013 to 2016 achieved through share gains and innovation
-
$125 million of organic aerospace investments to expand jet engine
-
Growing inorganically through $2.85 billion Firth Rixson acquisition;
on path to close by year-end, regulatory approvals nearly complete;
expected to contribute incremental $1.6 billion revenues and $350
million EBITDA in 2016 -
Majority of key end markets growing strong from 2015 to 2017,
including aerospace which will drive 52 percent of 2014 revenues -
Reaffirmed $1.2 billion in incremental revenue growth by 2016; $900
million coming from share gains through innovations - Adjusted EBITDA margin on track to exceed historical highs in 2016
Global Rolled Products
-
Investments in value-add growth projects, including $190 million for
Davenport, IA aerospace manufacturing technology, $600 million for two
North American automotive sheet expansions, and $40 million for
aseptic foil in Brazil -
Shifting to higher margin product mix, increasing aerospace and
automotive revenue by 7 percentage points from 25 percent in 2014 to
32 percent in 2017 -
More than 75 percent of 2015 to 2016 revenue growth already committed
with customer contracts -
Reaffirmed $1.0 billion in incremental revenue growth by 2016; $900
million through share gains and innovations -
On track to deliver adjusted EBITDA per metric ton at or above average
historical highs in 2016
Global Primary Products
-
Continue reshaping upstream portfolio to create globally competitive
commodity business, improve productivity and lower the cost base -
Conversion to Alumina Pricing Index (API)/spot pricing continues to
grow with 68 percent of third-party shipments on API/spot pricing
estimated for 2014 and expected to increase to 84 percent in 2016 -
Stronger value-add sales enhancing profitability, value-add products
increased from 57 percent in 2010 to 65 percent of total shipments in
2014, and expected to grow to 70 percent in 2016 -
Position on alumina cost curve improved to 25th percentile
in 2014 from 27th percentile in 2013; reaffirmed goal to
improve position to 21st percentile by 2016 -
Improved smelting cost per ton of production while maintaining 43rd
position on global aluminum cost curve in 2014; goal to improve by 5
percentage points to 38th percentile in 2016 reaffirmed -
On track to reduce 549,000 metric tons of high-cost smelting capacity
this year -
Aluminum demand continuing to grow, current run-rate surpassing
expectations of demand doubling between 2010 and 2020
A replay of the Alcoa 2014 Investor Day webcast and archived slides are
available on www.alcoa.com/investorday.
About Alcoa
A global leader in lightweight metals technology, engineering and
manufacturing, Alcoa innovates multi-material solutions that advance our
world. Our technologies enhance transportation, from automotive and
commercial transport to air and space travel, and improve industrial and
consumer electronics products. We enable smart buildings, sustainable
food and beverage packaging, high-performance defense vehicles across
air, land and sea, deeper oil and gas drilling and more efficient power
generation. We pioneered the aluminum industry over 125 years ago, and
today, our 60,000 people in 30 countries deliver value-add products made
of titanium, nickel and aluminum, and produce best-in-class bauxite,
alumina and primary aluminum products. For more information, visit www.alcoa.com,
follow @Alcoa on Twitter at www.twitter.com/Alcoa
and follow us on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains “forward-looking” statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include those containing such words as “anticipates,”
“estimates,” “expects,” “forecasts,” “intends,” “outlook,” “plans,”
“projects,” “should,” “targets,” “will,” or other words of similar
meaning. All statements that reflect Alcoa’s expectations, assumptions
or projections about the future other than statements of historical fact
are forward-looking statements, including, without limitation, forecasts
concerning global demand growth for aluminum, end market conditions,
supply/demand balances, and growth opportunities for aluminum in
automotive, aerospace, and other applications; targeted financial
results or operating performance; statements about Alcoa’s strategies,
outlook, and business and financial prospects; and statements regarding
Alcoa’s portfolio transformation and the proposed acquisition of the
Firth Rixson business, including the expected benefits of the
transaction and Firth Rixson’s expected sales growth and contribution to
revenues and EBITDA. These statements reflect beliefs and assumptions
that are based on Alcoa’s perception of historical trends, current
conditions and expected future developments, as well as other factors
management believes are appropriate in the circumstances.
Forward-looking statements are subject to a number of known and unknown
risks, uncertainties, and other factors and are not guarantees of future
performance. Important factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements include: (a) material adverse changes in aluminum industry
conditions, including global supply and demand conditions and
fluctuations in London Metal Exchange-based prices and premiums, as
applicable, for primary aluminum, alumina, and other products, and
fluctuations in indexed-based and spot prices for alumina; (b)
deterioration in global economic and financial market conditions
generally; (c) unfavorable changes in the markets served by Alcoa,
including aerospace, automotive, commercial transportation, building and
construction, packaging, defense, and industrial gas turbine; (d) the
impact of changes in foreign currency exchange rates on costs and
results; (e) increases in energy costs or the unavailability or
interruption of energy supplies; (f) increases in the costs of other raw
materials; (g) Alcoa’s inability to achieve the level of revenue growth,
cash generation, cost savings, improvement in profitability and margins,
fiscal discipline, or strengthening of competitiveness and operations
(including moving its alumina refining and aluminum smelting businesses
down on the industry cost curves and increasing revenues and improving
margins in its Global Rolled Products and Engineered Products and
Solutions segments) anticipated from its restructuring programs and
productivity improvement, cash sustainability, technology, and other
initiatives; (h) Alcoa’s inability to realize expected benefits, in each
case as planned and by targeted completion dates, from sales of non-core
assets, or from newly constructed, expanded, or acquired facilities, or
from international joint ventures, including the joint venture in Saudi
Arabia; (i) political, economic, and regulatory risks in the countries
in which Alcoa operates or sells products, including unfavorable changes
in laws and governmental policies, civil unrest, imposition of
sanctions, expropriation of assets, or other events beyond Alcoa’s
control; (j) the outcome of contingencies, including legal proceedings,
government investigations, and environmental remediation; (k) the impact
of cyber attacks and potential information technology or data security
breaches; (l) failure to receive, delays in the receipt of, or
unacceptable or burdensome conditions imposed in connection with, all
required regulatory approvals, or the inability to satisfy the other
closing conditions to the proposed Firth Rixson acquisition; (m) the
risk that the Firth Rixson business will not be integrated successfully
or such integration may be more difficult, time-consuming or costly than
expected; (n) the possibility that certain assumptions with respect to
Firth Rixson or the proposed transaction could prove to be inaccurate;
(o) the loss of customers, suppliers and other business relationships of
Alcoa or Firth Rixson as a result of the proposed acquisition; and (p)
the other risk factors summarized in Alcoa’s Form 10-K for the year
ended December 31, 2013, Forms 10-Q for the quarters ended March 31,
2014, June 30, 2014, and September 30, 2014, and other reports filed
with the Securities and Exchange Commission. Alcoa disclaims any
obligation to update publicly any forward-looking statements, whether in
response to new information, future events or otherwise, except as
required by applicable law.
Non-GAAP Financial Measures
Alcoa has not provided a reconciliation of any forward-looking non-GAAP
financial measures to the most directly comparable GAAP financial
measures, due primarily to variability and difficulty in making accurate
forecasts and projections, as not all of the information necessary for a
quantitative reconciliation is available to the Company without
unreasonable effort.
Alcoa
Investor Contact
Kelly Pasterick, 212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact
Monica Orbe, 212-836-2632
Monica.Orbe@alcoa.com