RNS Number:3185Q
Alcan Inc
22 January 2002
ALCAN REPORTS OPERATING EARNINGS OF 22 CENTS PER SHARE
FOR THE FOURTH QUARTER AND DETAILS ADDITIONAL SPECIAL
CHARGES
HIGHLIGHTS
* Net income of US$73 million (US$0.22 per share) before non-recurring items and
foreign currency translation effects
* Operating cash flow of US$617 million
* Total aluminum volume up 1% from previous quarter despite challenging business
conditions
* Non-recurring after-tax charges of US$446 million, including previously
announced restructuring and merger integration costs, as well as other special
items
MONTREAL, CANADA - January 22, 2002 - Alcan Inc. (Stock Symbol: AL) reports
fourth quarter consolidated net income, excluding non-recurring items and
foreign currency translation effects, of US$73 million (US$0.22 per share)
compared to US$132 million (US$0.41 per share) in the fourth quarter of 2000 and
US$121 million (US$0.37 per share) in the third quarter of 2001.
Including non-recurring items and foreign currency translation effects, net loss
for the quarter was US$357 million (US$1.12 per share) compared to net income of
US$110 million (US$0.34 per share) in the fourth quarter of 2000 and US$151
million (US$0.46 per share) in the previous quarter.
Commenting on the results, Travis Engen, President and Chief Executive Officer,
said, "Our operating earnings were good in the face of lower aluminum prices and
very challenging business conditions, and ongoing working capital management has
contributed to a significant increase in operating cash flow. During the fourth
quarter, we made significant progress in implementing the restructuring program
announced in October 2001. In addition, we continue to capture merger-related
synergies in advance of our initial plans."
The results for the fourth quarter of 2001 included a net non-recurring after-
tax charge of US$446 million (US$1.39 per share). This includes a US$166 million
charge (US$0.52 per share) related to the restructuring program announced on
October 17, 2001 and a US$37 million charge (US$0.12 per share) related to the
synergy program announced in the fourth quarter of 2000 in relation to the
merger with algroup. Also included are impairment provisions of US$88 million
(US$0.27 per share) in relation to certain assets and capitalized project costs,
a US$167 million charge (US$0.52 per share) related to environmental reserves,
and a favourable prior year tax adjustment of US$12 million (US$0.04 per share).
The fourth quarter also included a US$16 million gain (US$0.05 per share) for
foreign currency translation effects. The year-ago quarter included a non-
recurring charge, net of foreign currency translation effects, of US$22 million
(US$0.07 per share) and the third quarter of 2001 included a US$30 million gain
(US$0.09 per share) for foreign currency translation effects.
For the full year, earnings per share, excluding non-recurring items and foreign
currency translation effects, were US$1.51 per share compared to US$2.25 per
share during 2000. On an as reported basis, earnings per share were (US$0.01)
compared to US$2.45 for the comparable period of 2000.
CONSOLIDATED REVIEW
FOURTH FULL THIRD
QUARTER YEAR QUARTER
(US$ millions, unless otherwise noted) 2001 2000 2001 2000 2001
Sales & operating revenues 3,037 3,182 12,626 9,148 3,157
Shipments (thousands of tonnes)
Ingot products 1 427 374 1,419 974 368
Rolled products 451 478 1,937 1,855 474
Conversion of customer-owned metal 82 76 344 328 84
Aluminum used in engineered products & packaging 101 138 553 352 123
Total aluminum volume 1,061 1,066 4,253 3,509 1,049
Ingot product realizations (US$ per tonne) 1,483 1,585 1,581 1,667 1,575
Rolled product realizations (US$ per tonne) 2 2,298 2,516 2,385 2,455 2,379
Average London Metal Exchange 3-
month price (US$ per tonne) 1,337 1,527 1,454 1,567 1,405
Net income excluding non-recurring items
and foreign exchange translation 73 132 487 581 121
Non-recurring items (446) (35) (533) (3) -
Foreign exchange translation 16 13 51 40 30
Net income (loss) including non-recurring
items and foreign exchange translation (357) 110 5 618 151
Economic Value Added (EVA(R)), excluding
purchase accounting adjustments (80) 34 8 153 8
1 Includes primary and secondary ingot and scrap, as well as shipments resulting
from metal trading activities
2 Excluding conversion of customer owned metal
Sales and operating revenues for the quarter were lower than the year-ago
quarter, due mainly to lower aluminum selling prices and rolled product
shipments, offset in part by higher shipments of ingot products. As compared to
the previous quarter, sales and operating revenues were lower due mainly to a
decline in aluminum selling prices.
Total aluminum volume was 1,061 thousand tonnes (kt) in the quarter, compared to
1,066 kt a year earlier and to 1,049 kt in the preceding quarter. This includes
shipments of ingot and rolled products, conversion of customer-owned metal, and
aluminum used in engineered products and packaging.
Ingot products realizations of US$1,483 per tonne decreased by 6% from the year-
ago quarter compared with a 12% decrease in the London Metal Exchange (LME)
price, due mainly to the time lag of about one month in pricing ingot products
to customers. Compared to the previous quarter, ingot realizations decreased by
6% versus a 5% decline in the LME price.
Rolled products realizations of US$2,298 per tonne were 9% lower than in the
prior-year and 3% lower than in the previous quarter.
For the quarter, the net loss of US$357 million compares to net income of US$110
million in the year-ago quarter and to net income of US$151 million in the
previous quarter. The US$467 million decrease, as compared to the year-ago
quarter, and the US$508 million decrease, as compared to the previous quarter,
were primarily due to the non-recurring charges of US$446 million and lower
aluminum prices.
SEGMENT REVIEW
FOURTH FULL THIRD
QUARTER YEAR QUARTER
(US$ millions) 2001 2000 2001 2000 2001
EBITDA
Primary Metal 204 298 1,117 994 276
Aluminum Fabrication, Americas
and Asia 67 47 325 296 87
Aluminum Fabrication, Europe 4 54 159 164 30
Packaging 88 48 352 73 86
EBITDA from operating segments 363 447 1,953 1,527 479
Depreciation & amortization (216) (195) (820) (545) (204)
Restructuring, impairment and other
special charges (657) - (657) - -
Intersegment and other 67 (31) (40) 32 46
Corporate offices (26) (16) (75) (49) (17)
Interest (64) (50) (254) (78) (70)
Income taxes 184 (28) (42) (254) (67)
Minority interests 10 (1) 13 1 3
Net income (loss) before goodwill
amortization (339) 126 78 634 170
Net income (loss) after goodwill
amortization (357) 110 5 618 151
Segments
Fourth quarter earnings before interest, taxes, depreciation and amortization
(EBITDA) for Primary Metal, at US$204 million, decreased by 32% compared to the
year-ago quarter, due mainly to lower selling prices for aluminum and alumina,
which more than offset the favourable impact of higher shipments of ingot
products. Compared to the preceding quarter, EBITDA was 26% lower due mainly to
a decrease in selling prices, which more than offset higher volumes of ingot
product sales.
For Fabrication, Americas and Asia, EBITDA of US$67 million was 43% higher than
in the previous year, mainly as a result of the favourable impact of exchange
rates on costs in Asia and better selling prices in North America and Asia.
Compared to the preceding quarter, EBITDA decreased by 23%, due to lower
shipments of rolled products in North America and certain cost increases in
North America and Asia, offset in part by improvements in volumes and production
costs in Brazil.
For Fabrication, Europe, EBITDA, at US$4 million was US$50 million lower than in
the previous year, mainly as a result of lower volumes and higher production
costs for rolled products. Compared to the third quarter of 2001, EBITDA
decreased by US$26 million, due mainly to lower rolled products shipments and
realizations resulting from the weakening economic conditions, as well as higher
production costs in rolled products.
The Packaging group's EBITDA, at US$88 million, increased by US$40 million
compared to the fourth quarter of the previous year, which included special
charges of US$26 million related to the rationalization following the merger
with algroup. The improvement also reflects a more favourable product mix and
productivity savings. EBITDA was US$2 million higher than in the previous
quarter, due to lower material costs and other manufacturing cost reductions,
which more than offset the effect of lower sales volume.
Reconciliation to net income
Depreciation and amortization of USS$216 million was 11% higher than the year-
ago quarter and 6% higher than in the previous quarter, largely due to the Alma
smelter which reached full capacity during the quarter.
The non-recurring items consisted of the fourth quarter portion of the
restructuring program announced on October 17th, 2001 (US$236 million pre-tax),
merger integration costs (US$52 million pre-tax), revisions to environmental
provisions (US$246 million pre-tax), and impairment provisions related to
certain assets and capitalized project costs (US$123 million pre-tax).
"Intersegment and other" includes the deferral or realization of profits on
intersegment sales of aluminum as well as other non-operating items. The fourth
quarter included a realization of previously deferred profits as aluminum
prices and inventories declined during the quarter.
Interest expense, at US$64 million, was US$14 million higher compared to the
previous year as no interest was capitalized during the quarter in relation with
the new smelter in Alma, Quebec. Interest expense was US$6 million lower than in
the previous quarter, reflecting lower interest rates and debt levels. The
debt:equity ratio at December 31, 2001 was 32:68, compared to 33:67 at the end
of last year and 34:66 at the end of the third quarter of 2001.
For the full year, excluding the currency revaluation of Canadian dollar
deferred taxes, the tax effect of the business disposal in Jamaica and the non-
recurring items, the Company's effective tax rate was 35%.
For the fourth quarter of 2001, the average number of common shares outstanding
was 320.9 million compared to 320.2 million in the year-ago quarter and 320.8
million in the third quarter. At December 31, 2001, 320.9 million shares were
outstanding.
OUTLOOK
The Company expects to continue to benefit from recently completed investments,
as well as from various earnings improvement initiatives. However, current low
aluminum prices and the difficult economic conditions are expected to continue
to put pressure on selling prices, shipment volumes and product mix.
Based on the current 3-month LME aluminum price of about US$1,380 per tonne,
and the continued challenging economic environment, Alcan presently expects that
net income per common share (excluding non-recurring items, foreign currency
translation effects and goodwill amortization) will be between US$0.25 and
US$0.35 for the first quarter of 2002. For the full year, the Company expects
business conditions to be challenging for at least the first six months. Based
upon current 3-month LME aluminum price of approximately US$1,380 per tonne, the
Company presently expects that net income per share (excluding non-recurring
items, foreign currency translation effects and goodwill amortization) will be
between US$1.70 and US$2.10 for 2002.
Statements made in this press release which describe the Company's or
management's objectives, projections, estimates, expectations or predictions of
the future may be "forward-looking statements" within the meaning of securities
laws, which can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "estimates," "anticipates" or
the negative thereof or other variations thereon. The Company cautions that, by
their nature, forward-looking statements involve risk and uncertainty and that
the Company's actual actions or results could differ materially from those
expressed or implied in such forward-looking statements or could affect the
extent to which a particular projection is realized.
Important factors which could cause such differences include global supply and
demand conditions for aluminum and other products, aluminum ingot prices and
changes in raw materials' costs and availability, changes in the relative
value of various currencies, cyclical demand and pricing within the principal
markets for the Company's products, changes in government regulations,
particularly those affecting environmental, health or safety compliance,
economic developments, relationships with and financial and operating conditions
of customers and suppliers, the effects of integrating acquired businesses and
the ability to attain expected benefits and other factors within the countries
in which the Company operates or sells its products and other factors relating
to the Company's ongoing operations including, but not limited to, litigation,
labour negotiations and fiscal regimes.
Alcan is a multinational, market-driven company and a global leader in aluminum
and specialty packaging with annual revenues of approximately US$13 billion in
2000. With world-class operations in primary aluminum, fabricated aluminum as
well as flexible and specialty packaging, Alcan is well positioned to meet and
exceed its customers' needs for innovative solutions and service. Alcan employs
approximately 48,000 people and has operating facilities in 38 countries.
NOTE
Alcan completed its merger with the former algroup in October 2000.
Consequently, results from the operations of algroup have been included with the
financial results of Alcan since the fourth quarter of 2000.
All tonnages are stated in metric tonnes, equivalent to 2,204.6 pounds.
All figures are unaudited.
QUARTERLY RESULTS WEBCAST
Alcan's quarterly results conference call with analysts will take place on
Tuesday, January 22, 2002 at 10:00 a.m. and will be webcast via the Internet at
www.alcan.com.
Supporting documentation (press release, presentation to analysts and
supplementary information) is available at www.alcan.com., using the Investors
link. A written transcript of the conference call will also be posted on the
website in the upcoming week.
MEDIA CONTACT: Marc Osborne
Tel: +1 (514)848-1342
INVESTMENT COMMUNITY CONTACT: Serge Michaud
Tel: +1 (514)848-8368
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Periods ended December 31 Fourth Quarter Year
(in millions of US$, except per share amounts) 2001 2000 2001 2000
Sales and operating revenues $3,037 $3,182 $12,626 $9,148
Costs and expenses
Cost of sales and operating expenses 2,464 2,569 9,999 7,113
Depreciation and amortization 216 195 820 545
Selling, administrative and general expenses 140 138 547 405
Research and development expenses 37 33 135 81
Interest (note 7) 64 50 254 78
Restructuring, impairment and other special charges (note 1) 657 - 657 -
Other (income) expenses - net (notes 2 and 5) (7) 42 110 43
3,571 3,027 12,522 8,265
Income (Loss) before income taxes and other items (534) 155 104 883
Income taxes (184) 28 42 254
Income (Loss) before other items (350) 127 62 629
Equity income 1 - 3 4
Minority interests 10 (1) 13 1
Net income (loss) before amortization of goodwill $ (339) $ 126 $ 78 $ 634
Amortization of goodwill 18 16 73 16
Net income (loss) $ (357) $ 110 $ 5 $ 618
Dividends on preference shares 2 3 8 10
Net income (loss)
attributable to common shareholders $ (359) $ 107 $ (3) $ 608
Net income (loss) per common share before amortization
of goodwill (basic and diluted) $(1.06) $0.39 $ 0.22 $2.50
Amortization of goodwill per common share 0.06 0.05 0.23 0.05
Net income (loss) per common share (basic and diluted) $(1.12) $0.34 $(0.01) $2.45
Dividends per common share $ 0.15 $0.15 $ 0.60 $0.60
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(unaudited for 2001)
Year ended December 31 (in millions of US$) 2001 2000
Retained earnings - beginning of year $ 4,290 $ 4,227
Net income 5 618
Amount related to common shares purchased for
cancellation (note 8) - (400)
Dividends - Common (192) (145)
- Preference (8) (10)
Retained earnings - end of year $ 4,095 $ 4,290
CONSOLIDATED BALANCE SHEET
(unaudited for 2001)
(in millions of US$) December 31, 2001 December 31, 2000
ASSETS
Current assets
Cash and time deposits $ 119 $ 261
Trade receivables (note 5) 1,216 1,721
Other receivables 532 559
Inventories - Aluminum operating segments
. Aluminum 875 1,034
. Raw materials 413 414
. Other supplies 269 268
1,557 1,716
- Packaging operating segment 393 399
1,950 2,115
Total current assets 3,817 4,656
Deferred charges and other assets 737 719
Property, plant and equipment
Cost (excluding Construction work in progress) 16,225 14,807
Construction work in progress 613 1,979
Accumulated depreciation (7,136) (6,753)
9,702 10,033
Intangible assets, net of accumulated amortization 298 330
Goodwill, net of accumulated amortization 2,895 2,669
Total assets $ 17,449 $ 18,407
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Payables $ 2,328 $ 2,427
Short-term borrowings 614 1,080
Debt maturing within one year 229 333
3,171 3,840
Debt not maturing within one year (note 6) 3,248 3,195
Deferred credits and other liabilities 1,131 874
Deferred income taxes 1,006 1,227
Minority interests 132 244
Shareholders' equity
Redeemable non-retractable preference shares 160 160
Common shareholders' equity
Common shares 4,657 4,597
Retained earnings 4,095 4,290
Deferred translation adjustments (151) (20)
8,601 8,867
8,761 9,027
Total liabilities and shareholders' equity $ 17,449 $ 18,407
Common shareholders' equity per common share $ 26.81 $ 27.89
Ratio of total borrowings to equity 32:68 33:67
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Periods ended December 31 Fourth Quarter Year
(in millions of US$) 2001 2000 2001 2000
Operating activities
Net income (loss) $ (357) $ 110 $ 5 $ 618
Adjustments to determine cash from
operating activities:
Depreciation and amortization of intangibles 216 195 820 545
Amortization of goodwill 18 16 73 16
Deferred income taxes (151) (25) (152) 52
Equity income - net of dividends - - (1) (3)
Change in operating working capital
Change in receivables 207 3 122 (25)
Change in inventories 97 54 75 (117)
Change in payables 150 (90) (58) (81)
454 (33) 139 (223)
Change in deferred charges, other assets, deferred credits and
other liabilities - net 199 23 131 28
Loss (Gain) on sales of businesses - net 1 - 123 (9)
Asset impairment provisions 232 - 232 -
Other - net 5 31 17 42
Cash from operating activities $ 617 $ 317 $1,387 $1,066
Financing activities
New debt $ 24 $ 952 $1,852 $1,586
Debt repayments (362) (95) (1,838) (419)
Short-term borrowings - net (277) 109 (420) 280
Sale of receivables 300 - 300 -
Common shares purchased for cancellation - (167) - (530)
Common shares issued 3 3 61 21
Dividends - Alcan shareholders
(including preferences) (51) (50) (200) (155)
- Minority interests - - (2) (2)
Cash from (used for) financing activities (363) 752 (247) 781
Investment activities
Property, plant and equipment (381) (516) (1,110) (1,491)
Business acquisitions (3) (44) (404) (244)
Net proceeds from disposal of businesses, investments and
other assets 33 11 239 184
Preacquisition loan to algroup to finance special payment to
algroup shareholders - (532) - (532)
Cash used for investment activities (351) (1,081) (1,275) (2,083)
Effect of exchange rate changes on cash and time deposits (7) 7 (7) 2
Decrease in cash and time deposits (104) (5) (142) (234)
Cash of companies consolidated (deconsolidated) - net - 175 - 180
Cash and time deposits - beginning of period 223 91 261 315
Cash and time deposits - end of period $ 119 $ 261 $ 119 $ 261
1. RESTRUCTURING, IMPAIRMENT AND OTHER SPECIAL CHARGES
Restructuring
In the fourth quarter of 2001, the Company announced a restructuring program
largely due to increased competitive pressures and market outlook. The
restructuring will result in a series of plant sales, closures and divestments
throughout the organization as well as a reduction of approximately 5% to 7% of
the Company's workforce. As a result of this restructuring the Company incurred
costs of US$236 million, pre tax, in the fourth quarter of 2001, recorded in
Restructuring, impairment and other special charges, which includes severance
costs of US$97 million and write downs of fixed assets and working capital and
other costs of US$139 million.
Also recorded in Restructuring, impairment and other special charges in the
fourth quarter of 2001 were costs of US$52 million, pre tax, primarily for the
closure of facilities at Glasgow, U.K. These costs relate to the synergy program
announced in the fourth quarter of 2000 in relation to the merger with algroup.
All 200 employees at the Company's Glasgow, U.K. site will be affected by this
closure.
Impairment Charges
In the fourth quarter of 2001, following a detailed Business Portfolio Review
impairment provisions were recorded in Restructuring, impairment and other
special charges for asset write-offs of US$108 million, pre tax. As well,
impairment provisions were recorded for project cost write-offs of US$15
million, pre tax.
Other Special Charges
In the fourth quarter of 2001, the Company increased its environmental reserves
by US$246 million, pre tax, to cover treatment costs of stored spent potlining
in Quebec and British Columbia, Canada, as well as to cover site restoration
costs in Canada and in the United Kingdom.
2. SALE OF THE JAMAICAN OPERATIONS
Effective May 31, 2001, the Company completed the sale of its Jamaican
operations. Proceeds from the sale were US$153 million. The total pre-tax loss
on the sale was US$123 million which was recorded in Other (income) expenses
-net. An amount of US$90 million was recorded in the first quarter with the
remaining amount charged in the second quarter.
3. SALE OF ASSETS PURSUANT TO THE EUROPEAN COMMISSION REQUIREMENTS RELATED TO
THE MERGER
The following transactions were completed in the second quarter of 2001 as part
of the divestment requirements imposed by the European Commission as a condition
to its approval of the merger between Alcan and Alusuisse Group Ltd in October
2000.
* The Company sold its alumina specialties production plant, Martinswerk,
located in Bergheim, Germany.
* The Company sold a number of foil container manufacturing assets in
Spain and Germany.
* The Company sold its lithographic sheet production plant, Star Litho,
located in Bridgnorth, United Kingdom.
The Company received proceeds of approximately US$54 million from these sales.
4. ACQUISITION OF 30% OF GOVE ALUMINA REFINERY
In the first quarter of 2001, the Company acquired the remaining 30% of the
Gove alumina refinery and related bauxite mine at a cost of US$379 million,
subject to certain post-closing adjustments. As a result of this transaction,
the Company now owns 100% of these assets.
5. SALE OF RECEIVABLES
Under an agreement effective December 18, 2001 the Company sold to a third
party an undivided interest in certain trade receivables of US$330 million,
with limited recourse. Net cash proceeds from this ongoing agreement were
US$300 million with US$30 million held in reserve which has been recorded in
Deferred charges and other assets. Net proceeds were used to repay commercial
paper borrowings. The Company acts as a service agent and administers the
collection of the receivables sold. The related purchase discount is included
in Other (income) expenses - net.
6. LONG TERM DEBT
On January 15, 2002, the Company redeemed all of its outstanding 8 7/8%
US$150 million debentures due on January 15, 2022. The redemption was at a
price of 104.15%. A loss of approximately US$6 million will be recorded in
the first quarter of 2002.
In the second quarter of 2001, the Company issued Euro 600 million of 5.5%
Euro, notes due 2006.
During the first quarter of 2001, the Company issued US$400 million of 6.45%
debentures due 2011 and US$400 million of 7.25% debentures due 2031.
7. CAPITALIZATION OF INTEREST COSTS
Total interest costs in the fourth quarter and for the year were US$64
million and US$284 million (2000: US$75 million and US$159 million)
respectively, of which nil and US$30 million (2000: US$25 million and US$81
million) respectively, were capitalized.
8. SHARE REPURCHASE PROGRAM
Under a normal course issuer bid, which terminated on June 18, 2001, the
Company was authorized to repurchase up to 21,800,000 common shares,
representing approximately 10% of the outstanding shares. In 2001, no
common shares were purchased under this authorization.
In the fourth quarter and for the year 2000, 5,360,000 common shares and
16,598,100 common shares, respectively, were purchased under this
authorization.
Montreal, Canada
22 January 2002
This information is provided by RNS
The company news service from the London Stock Exchange
San Uk Grp.perp (LSE:BB32)
Historical Stock Chart
From Nov 2024 to Dec 2024
San Uk Grp.perp (LSE:BB32)
Historical Stock Chart
From Dec 2023 to Dec 2024
