Alcoa on January 9 announced the best full-year results in the company’s 118-year history. Annual income from continuing operations was $2.2 billion, or $2.47 per diluted share for 2006. After excluding the impact of previously announced restructuring and impairment charges, income from continuing operations was $2.5 billion, or $2.90, a 75 percent increase from 2005.
Driven by higher metal prices and strong demand for aluminum in the aerospace, commercial transportation and commercial building markets, revenues for 2006 increased 19 percent to a record $30.4 billion.
“This year, top and bottom-line performance has been the best in our company’s history,” said Alcoa chairman and CEO Alain Belda. “Revenues and income from continuing operations achieved record levels.
“Our management team took full advantage of the opportunities the market offered, driving revenue, mitigating costs, bringing new products and innovation to the market, expanding our global footprint and growing our customer base. We did this while continuing to invest in modernizing our existing plants and building new operations that will enable us to deliver strong results for years to come. We are delivering results now and investing in our future.
“As we enter 2007, market fundamentals remain strong. We will generate more than enough cash this year to fund our capital investment programs. We will continue to deliver strong results, invest in our future, and keep a strong balance sheet. And, we continue to manage our investment decisions and portfolio actions on the basis of contribution to profitable growth.”
Fourth-quarter income from continuing operations was $258 million, or $0.29, or $644 million, or $0.74, excluding restructuring and impairment charges. This was a 179 percent increase from the fourth quarter of 2005, and a 20 percent increase from the third quarter of 2006. In the fourth quarter, the company announced charges related to restructuring and the formation of a new joint venture for its soft alloy extrusion business and re-positioning of its downstream operations.
Net income for the fourth quarter 2006 was $359 million, or $0.41, including after-tax charges of $386 million, or $0.44, for the restructuring and impairment. This compares to $224 million, or $0.26, in the year ago quarter, and $537 million, or $0.61, in the third quarter of 2006. The gain on the sale of the Home Exteriors business in discontinued operations is included in the net income results.
Fourth-quarter revenues increased 20 percent from a year ago to $7.8 billion. Cost of goods sold as a percent of revenue in the quarter decreased 60 basis points from the sequential quarter to 78.2 percent.
Taxes for the quarter were favorably impacted by the restructuring and impairment charges, one-time tax items totaling $69 million, or $0.08, and a lower annual operational rate as a result of income being earned in lower tax cost jurisdictions.
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