![](https://capedge.com/proxy/8-K/0000004285-07-000007/logo.gif)
Record income from continuing operations of $1.60 per common share compared to $1.21 a year earlier and $1.12 in the fourth quarter of 2006; | |
Record operating earnings of $1.67 per common share compared to $1.26 a year earlier and $1.09 in the fourth quarter of 2006; | |
Cash flow from operating activities in continuing operations of $582 million, a first-quarter record, compared to $362 million a year earlier and a record $1.1 billion in the fourth quarter of 2006; | |
Debt as a percentage of invested capital of 33% at the end of the first quarter compared to 35% at the end of 2006 and 40% at the end of 2005; | |
Selling, General and Administrative expenses at 5.8% of revenues, down from 6.6% a year earlier and 6.7% last quarter. |
First Quarter | Fourth Quarter | |||||||||
($ millions, except where indicated) | 2007 | 2006 | 2006 | |||||||
Operating earnings - excluding foreign currency | ||||||||||
balance sheet translation and Other Specified Items | 618 | 473 | 406 | |||||||
Foreign currency balance sheet translation | (19 | ) | (9 | ) | 97 | |||||
Other Specified Items (OSIs) | (9 | ) | (10 | ) | (85 | ) | ||||
Income from continuing operations | 590 | 454 | 418 | |||||||
Income from discontinued operations | 1 | 3 | 4 | |||||||
Cumulative effect of accounting change | - | (4 | ) | - | ||||||
Net income | 591 | 453 | 422 | |||||||
Basic earnings per common share ($ per common share) | ||||||||||
Operating earnings | 1.67 | 1.26 | 1.09 | |||||||
Income from continuing operations | 1.60 | 1.21 | 1.12 | |||||||
Net income | 1.60 | 1.21 | 1.13 | |||||||
Average number of common shares outstanding (millions) | 367.1 | 373.1 | 371.5 |
2
First Quarter | Fourth Quarter | |||||||||
($ millions, unless otherwise noted) | 2007 | 2006 | 2006 | |||||||
Sales and operating revenues ($M) | 6,420 | 5,550 | 6,219 | |||||||
Shipment volumes (kt) | ||||||||||
Ingot products * | 744 | 749 | 776 | |||||||
Aluminum used in engineered products & packaging | 342 | 337 | 314 | |||||||
Total aluminum volume | 1,086 | 1,086 | 1,090 | |||||||
Aluminum pricing data ($ per tonne) | ||||||||||
Ingot product realizations * | 2,835 | 2,454 | 2,712 | |||||||
Average LME 3-month price (one-month lag) | 2,760 | 2,369 | 2,631 | |||||||
* The bulk of Alcan's ingot product sales are based on the LME 3-month price with a one-month lag plus a local market premium and any applicable product premium. |
First Quarter | Fourth Quarter | |||||||||
($ millions, except where indicated) | 2007 | 2006 | 2006 | |||||||
Cash flow from operating activities in continuing operations | 582 | 362 | 1,104 | |||||||
Dividends | (75 | ) | (58 | ) | (76 | ) | ||||
Capital expenditures | (312 | ) | (426 | ) | (610 | ) | ||||
Free cash flow from continuing operations | 195 | (122 | ) | 418 |
3
Cash flow from operating activities in continuing operations increased by $220 million compared to the year-ago quarter and decreased by $522 million compared to the fourth quarter of 2006. The increase in cash from operating activities in continuing operations over the year-ago quarter mainly reflects higher earnings and a less unfavourable movement in operating working capital, partially offset by an unfavourable movement in deferred items. The decrease over the prior quarter principally reflects seasonally typical unfavourable movements in operating working capital and deferred items which more than offset higher earnings. Debt as a percentage of invested capital as at March 31, 2007 was 33%, down from 35% at the end of the fourth quarter of 2006 due to lower debt and higher equity.
First Quarter | Fourth Quarter | |||||||||
($ millions) | 2007 | 2006 | 2006 | |||||||
Business Group Profit (BGP) | ||||||||||
Bauxite and Alumina | 175 | 129 | 156 | |||||||
Primary Metal | 844 | 758 | 755 | |||||||
Engineered Products | 174 | 154 | 168 | |||||||
Packaging | 140 | 146 | 109 | |||||||
Subtotal | 1,333 | 1,187 | 1,188 | |||||||
Equity accounted joint venture eliminations | (47 | ) | (71 | ) | (19 | ) | ||||
Change in fair market value of derivatives | (15 | ) | 14 | (82 | ) | |||||
1,271 | 1,130 | 1,087 | ||||||||
Corporate Items | ||||||||||
Intersegment, corporate offices and other | (89 | ) | (107 | ) | (255 | ) | ||||
Depreciation & amortization | (264 | ) | (251 | ) | (261 | ) | ||||
Interest | (60 | ) | (76 | ) | (76 | ) | ||||
Income taxes | (280 | ) | (269 | ) | (55 | ) | ||||
Equity income (loss) | 12 | 28 | (21 | ) | ||||||
Minority interests | - | (1 | ) | (1 | ) | |||||
Income from continuing operations | 590 | 454 | 418 |
4
On a sequential quarter basis, BGP increased by $89 million. Excluding OSIs and balance sheet translation effects, BGP increased by $112 million or 15%, reflecting higher aluminum prices and lower operating costs. These favourable impacts were partially offset by higher input costs (alumina, electricity and fuel-related raw material costs), lower volumes and lower contributions from power generation. Based on current forward prices for aluminum and rates for currency (including the recent weakening of the US dollar), results for the second quarter are expected to be similar to those of the first quarter.
5
Increase in rate / price | In millions of $ | $ / common share | ||||||||
Economic impact of changes in period-average exchange rates | ||||||||||
European currencies | $ | 0.10 | (50 | ) | (0.14 | ) | ||||
Canadian dollar | $ | 0.10 | (150 | ) | (0.42 | ) | ||||
Australian dollar | $ | 0.10 | (70 | ) | (0.19 | ) | ||||
Balance sheet translation impact of changes in period-end exchange rates | ||||||||||
Canadian dollar | $ | 0.10 | (230 | ) | (0.63 | ) | ||||
Australian dollar | $ | 0.10 | (25 | ) | (0.07 | ) | ||||
Economic impact of changes in period-average LME prices* | ||||||||||
Aluminum | $ | 100/t | 190 | 0.51 | ||||||
* Realized prices generally lag LME price changes by one month. Changes in local and regional premia may also impact aluminum price realizations. Sensitivities are updated as required to reflect changes in the company's commercial arrangements and portfolio of operations. Not included are sensitivities to energy and raw-material prices, which may have significant impacts. |
6
7
8
MEDIA CONTACT: Anik Michaud | INVESTOR CONTACT: Simon Ellinor |
Tel.: (514) 848-8151
| Tel. (514) 848-8368 |
Conference call numbers: | Conference call numbers: |
North America (877) 652-1294 | North America (877) 421-3963 |
Local & overseas (706) 643-7783 | Local & overseas (706) 643-9535 |
9
Three months ended March 31 | 2007 | 2006 | |||||
(in millions of US$, except per share amounts) | |||||||
Sales and operating revenues | 6,420 | 5,550 | |||||
Costs and expenses | |||||||
Cost of sales and operating expenses, excluding depreciation and | |||||||
amortization noted below | 4,801 | 4,128 | |||||
Depreciation and amortization | 264 | 251 | |||||
Selling, administrative and general expenses | 374 | 364 | |||||
Research and development expenses | 54 | 52 | |||||
Interest | 60 | 76 | |||||
Restructuring charges - net | 12 | 14 | |||||
Other income - net | (3 | ) | (31 | ) | |||
5,562 | 4,854 | ||||||
Income from continuing operations before income taxes and other items | 858 | 696 | |||||
Income taxes | 280 | 269 | |||||
Income from continuing operations before other items | 578 | 427 | |||||
Equity income | 12 | 28 | |||||
Minority interests | - | (1 | ) | ||||
Income from continuing operations | 590 | 454 | |||||
Income from discontinued operations | 1 | 3 | |||||
Income before cumulative effect of accounting change | 591 | 457 | |||||
Cumulative effect of accounting change, net of income | |||||||
taxes of $2 in 2006 | - | (4 | ) | ||||
Net income | 591 | 453 | |||||
Dividends on preference shares | 3 | 2 | |||||
Net income attributable to common shareholders | 588 | 451 | |||||
Earnings (Loss) per share | |||||||
Basic: | |||||||
Income from continuing operations | 1.60 | 1.21 | |||||
Income from discontinued operations | - | 0.01 | |||||
Cumulative effect of accounting change | - | (0.01 | ) | ||||
Net income per common share - basic | 1.60 | 1.21 | |||||
Diluted: | |||||||
Income from continuing operations | 1.59 | 1.20 | |||||
Income from discontinued operations | - | 0.01 | |||||
Cumulative effect of accounting change | - | (0.01 | ) | ||||
Net income per common share - diluted | 1.59 | 1.20 | |||||
Dividends per common share | 0.20 | 0.15 |
10
March 31, 2007 | December 31, 2006 | ||||||
(in millions of US$) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and time deposits | 186 | 229 | |||||
Trade receivables (net of allowances of $67 in 2007 and $58 in 2006) | 3,106 | 2,910 | |||||
Other receivables and deferred charges | 1,171 | 1,195 | |||||
Deferred income taxes | 139 | 152 | |||||
Inventories | 3,228 | 3,186 | |||||
Current assets held for sale | 4 | 5 | |||||
Total current assets | 7,834 | 7,677 | |||||
Deferred charges and other assets | 1,070 | 1,087 | |||||
Investments | 1,476 | 1,509 | |||||
Deferred income taxes | 911 | 989 | |||||
Property, plant and equipment | |||||||
Cost (excluding construction work in progress) | 18,942 | 18,698 | |||||
Construction work in progress | 2,447 | 2,294 | |||||
Accumulated depreciation | (8,800 | ) | (8,592 | ) | |||
12,589 | 12,400 | ||||||
Intangible assets, net of accumulated amortization of $370 in 2007 | |||||||
and $346 in 2006 | 655 | 676 | |||||
Goodwill | 4,597 | 4,599 | |||||
Long-term assets held for sale | 1 | 2 | |||||
Total assets | 29,133 | 28,939 |
11
March 31, 2007 | December 31, 2006 | ||||||
(in millions of US$) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Payables and accrued liabilities | 5,335 | 5,430 | |||||
Short-term borrowings | 579 | 467 | |||||
Debt maturing within one year | 32 | 36 | |||||
Deferred income taxes | 35 | 46 | |||||
Total current liabilities | 5,981 | 5,979 | |||||
Debt not maturing within one year | 5,169 | 5,476 | |||||
Deferred credits and other liabilities | 1,681 | 1,787 | |||||
Post-retirement benefits | 3,363 | 3,381 | |||||
Deferred income taxes | 1,143 | 1,151 | |||||
Minority interests | 71 | 71 | |||||
Shareholders' equity | |||||||
Redeemable non-retractable preference shares | 160 | 160 | |||||
Common shareholders' equity | |||||||
Common shares | 6,275 | 6,235 | |||||
Additional paid-in capital | 664 | 672 | |||||
Retained earnings | 4,772 | 4,281 | |||||
Common shares held by a subsidiary | (31 | ) | (31 | ) | |||
Accumulated other comprehensive loss | (115 | ) | (223 | ) | |||
11,565 | 10,934 | ||||||
11,725 | 11,094 | ||||||
Total liabilities and shareholders' equity | 29,133 | 28,939 | |||||
12
Three months ended March 31 | 2007 | 2006 | |||||
(in millions of US$) | |||||||
OPERATING ACTIVITIES | |||||||
Income from continuing operations | 590 | 454 | |||||
Adjustments to determine cash from operating activities: | |||||||
Depreciation and amortization | 264 | 251 | |||||
Deferred income taxes | 67 | 144 | |||||
Equity loss (income), net of dividends | 8 | (16 | ) | ||||
Asset impairment charges | 1 | 9 | |||||
Gain on disposal of businesses and investments - net | (4 | ) | - | ||||
Stock option expense | 2 | 25 | |||||
Change in operating working capital | |||||||
Change in receivables | (165 | ) | (539 | ) | |||
Change in inventories | (27 | ) | (78 | ) | |||
Change in payables and accrued liabilities | (141 | ) | 20 | ||||
Change in deferred charges, other assets, deferred credits and | |||||||
other liabilities, and post-retirement benefits - net | (7 | ) | 92 | ||||
Other - net | (6 | ) | - | ||||
Cash from operating activities | 582 | 362 | |||||
FINANCING ACTIVITIES | |||||||
Proceeds from issuance of new debt - net of issuance costs | 13 | 17 | |||||
Debt repayments | (344 | ) | (66 | ) | |||
Short-term borrowings - net | 108 | (36 | ) | ||||
Common shares issued | 28 | 66 | |||||
Dividends - Alcan shareholders (including preference) | (75 | ) | (57 | ) | |||
- Minority interests | - | (1 | ) | ||||
Cash used for financing activities | (270 | ) | (77 | ) | |||
13
Three months ended March 31 | 2007 | 2006 | |||||
(in millions of US$) | |||||||
INVESTMENT ACTIVITIES | |||||||
Purchase of property, plant and equipment | (312 | ) | (426 | ) | |||
Business acquisitions and purchase of investments, net of cash and time | |||||||
deposits acquired | (2 | ) | (38 | ) | |||
Net proceeds from disposal of businesses, investments and other assets | 7 | 198 | |||||
Other | (49 | ) | - | ||||
Cash used for investment activities | (356 | ) | (266 | ) | |||
Effect of exchange rate changes on cash and time deposits | 1 | 3 | |||||
(Decrease) Increase in cash and time deposits | (43 | ) | 22 | ||||
Cash and time deposits - beginning of period | 229 | 181 | |||||
Cash and time deposits - end of period | 186 | 203 | |||||
14
15
16