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Alcoa Returns to Profitability in Third Quarter (posted 10/12/09)

October 12, 2009
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Alcoa achieved third quarter 2009 income from continuing operations of $73 million, compared to a loss of $312 million in the second quarter.

Alcoa recently announced third quarter 2009 income from continuing operations of $73 million, or $0.07 per diluted share, compared to a loss from continuing operations of $312 million, or $0.32 per share, in the second quarter of 2009. Income from continuing operations in the third quarter of 2008 was $306 million, or $0.37 per share. Excluding restructuring and special items, income for the third quarter 2009 was $39 million, or $0.04 per share.

The third quarter of 2009 had net income of $77 million, or $0.08 per share, compared with a net loss for the second quarter of 2009 of $454 million, or $0.47 per share. Net income in the third quarter of 2008 was $268 million, or $0.33 per share. Discontinued operations for the third quarter of 2009 had income of $4 million, or $0.01 per share. The second quarter of 2009 had a loss of $142 million, or $0.15 per share.

Restructuring and special items in the quarter totaled $34 million, or $0.03 per share. These items included a gain on the completion of a transaction to acquire bauxite and alumina refining interests in Suriname of $35 million and restructuring charges of $17 million before tax ($1 million after tax and non-controlling interests).

Revenues for the quarter were $4.6 billion compared with $4.2 billion in the second quarter of 2009, a 9% increase. Revenues were $7.0 billion in the third quarter of 2008. Sequentially, revenues were helped by an increase in realized prices for primary aluminum to $1972 per metric ton from $1667 per metric ton in the second quarter, as well as stabilization in the end markets.

“The financial and operational measures we took in the first half of the year are having a strong positive impact on our cash position and profitability,” said Klaus Kleinfeld, Alcoa’s president and CEO. “Despite unfavorable currency and energy headwinds, our performance this quarter indicates that Alcoa is weathering the economic storm and is in excellent shape to benefit when the market recovers.”

Revenues for the first nine months of 2009 were $13.0 billion, compared to $21.2 billion in the first nine months of 2008. Income from continuing operations for the first nine months of 2009 showed a loss of $719 million, or $0.78 per share, compared with income of $1.2 billion, or $1.40 per share, in the first nine months of 2008. The nine months of 2009 showed a net loss of $874 million, or $0.95 per share, compared to net income of $1.1 billion, or $1.35 per share, in the first nine months of 2008.

In the second half of 2009, there are signs that key markets the company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11% in the second half of 2009.

The Alumina segment’s after tax operating income (ATOI) in the third quarter was $65 million, a $72 million improvement from the second quarter. Alumina production increased 9%, or 305 thousand metric tons, and average third-party realized pricing improved 13%, helped by rising LME aluminum prices and improved demand. A $58 million benefit from the Suriname acquisition was partially offset by negative currency impacts of $28 million and higher energy costs of $13 million. The Juruti mine was officially commissioned this quarter and, combined with the Sao Luis refining expansion, will place Alcoa’s overall refining system in the top quartile on the global cost curve in terms of low-cost production.

Additional details, including an archive of a recent conference call discussing these results, are available at www.alcoa.com.

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