In results news Monday, Alcoa (NYSE:AA, Stock Forum) reported its fourth quarter results after market close, including a net loss of $1.19 billion.
The company says its net income for the fourth quarter 2008 was a loss of $1.19 billion or $1.49 per share, which includes restructuring, impairment and other special charges of $920 million or $1.15 per share. Net income for the fourth quarter of 2007 was $632 million, or 75 cents per share.
Income from continuing operations for the fourth quarter showed a loss of $929 million, or $1.16 per share in the quarter included $708 Million, or 88 cents per share, of restructuring, impairment and special charges, says the company. Income from continuing operations in the fourth quarter of 2007 was $638 million, or 75 cents per share.
“Results were driven by a 35 percent decline in aluminum prices in the quarter, (a 56 percent decline from July) and a sharp drop in demand, particularly from the automotive, commercial transportation and building and construction sectors,” says the company.
“We are taking wide-ranging measures to address the economic downturn,” said Klaus Kleinfeld, president and CEO of Alcoa. “We have streamlined our portfolio to focus on businesses where Alcoa is the recognized leader, curtailed production to adjust to weakened demand, reduced global headcount, and achieved significant savings in key raw materials.
Revenues for the fourth quarter were $5.7 billion, down from $6.1 billion in the fourth quarter 2007, while revenues for the full year 2008 were $26.9 billion and income from continuing operations was a profit of $229 million, or 28 cents per share.
The aluminum producer announced a series of actions last week aimed at conserving cash, reducing costs and increasing competitiveness during the economic downturn, including a reduction of more than 13,500 employees or 13% of the company’s global workforce by the end of the year. Alcoa also announced the implementation of further smelting reductions of more than 135,000 metric tons per year resulting in reduction of total primary aluminum output by more than 750,000 mtpy, or 18% of annualized output.
Last week, Alcoa reported that the total charges for the fourth quarter 2008 due to restructuring, impairment and other special charges were expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share.
On the Teck Cominco (TSX: T.TCK.B, Stock Forum) Bullboard Monday, oxinos
commented on the potential impact of Alcoa’s earnings on base metal producers, saying: “I think there is still room for this correction to continue. I'm waiting for more downside. It should go down more by the end of this week.. Then it may convince me to re-enter. Alcoa's Earnings Report will be released at the end of trading. If the numbers are as bad as I think they will be, it will affect base metal producers even more. Teck Cominco will also suffer because of the enormous debt level that will affect its bottom line[sic]”