Sun, Apr 06, 2003 - Page 10 News List

Alcoa's Q1 net income drops 31%

BLOOMBERG , PITTSBURGH

Alcoa Inc, the world's biggest maker of aluminum, said first-quarter net income fell 31 percent because of rising energy costs and an accounting change. Sales and selling prices for aluminum rose.

Net income dropped to US$151 million, or US$0,17 a share, from US$218 million, or US$0.26, a year earlier. Revenue rose to US$5.11 billion from US$4.9 billion, the company said in a statement.

Aluminum shipments fell 4.72 percent, the company said, and the average selling price for Alcoa's products rose 4.6 percent.

The company cut US$52 million in costs this quarter and has pruned US$808 million in expenses since 2001, when it set out to eliminate US$1 billion in annual costs by the end of this year.

"Sales were good and it continues to show they are taking out costs," said James Halloran, who helps over see US$24 billion in assets at National City Wealth Management. The firm owns about 1.5 million Alcoa shares.

Alcoa is shedding businesses, including some related to specialty chemicals and packaging equipment, that it doesn't consider essential to its strategy.

The quarter's gross profit margin widened to 20.3 percent from 19.2 percent in the fourth quarter because of the rise in selling prices, Alcoa said. Energy costs increased by US$110 million from the year-ago first quarter and by US$75 million from the fourth quarter. Energy, including natural gas and electricity, is the biggest expense in aluminum making.

Excluding costs related to a change in accounting for smelter maintenance, the company had a profit of US$195 million, or US$0.23 a share. On that basis the company was expected to earn US$0.19, the average estimate of analysts surveyed by Thomson Financial.

Shares of Pittsburgh-based Alcoa rose US$0.13 to US$20.04 at 4:15pm in New York Stock Exchange composite trading.

The stock has fallen 46 percent in the past year.

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