Alcan (AL) matched fourth-quarter estimates as strong aluminum prices led to a solid revenue performance.
The Montreal-based metals giant lost $361 million, or 91 cents a share, from continuing operations for the quarter ended Dec. 31, compared with the year-ago loss of $346 million, or 94 cents a share. On an operating basis, excluding certain costs, latest-quarter earnings rose to $205 million, or 54 cents a share, from the year-ago $112 million, or 30 cents a share, matching the Thomson First Call analyst consensus estimate.
Revenue fell to $5.05 billion from $6.54 billion a year earlier but beat the $4.6 billion Wall Street estimate.
"The sharp year-over-year improvement in operating earnings reflects strong market fundamentals and solid performances across all businesses," said CEO Travis Engen. For the year as a whole, he said, "we made good progress offsetting significant pressures from currency movements and input costs. After adjusting prior year results for the effects of the spinoff, our operating earnings increased by about 40% year over year, an excellent performance in a challenging environment."
Operating earnings for the fourth quarter were $93 million higher than in the comparable year-ago quarter. The improvement mainly reflected higher aluminum prices, improved volumes, better pricing and mix as well as contributions from synergies, which were partially offset by the impact of the rolled products spinoff and higher costs for energy and raw materials. Compared to the third quarter of 2005, operating earnings were up $8 million. The improvement mainly reflected the benefit of higher aluminum prices largely offset by unfavorable mark-to-market effects on derivatives, and the impact of lower volumes in the Packaging business due to normal seasonal declines and structural weakness in some end markets.
Total aluminum volume, at 1,096 thousand tonnes (kt), was down from a year earlier principally due to the spinoff of the rolled products business on Jan. 6, 2005. The significant year-over-year increase in ingot product shipments principally reflects third-party sales of ingot to Novelis that were previously classified as intercompany sales.