Update: Alcoa Slashes Jobs, Cuts Output

Shares are down 3.1% in extended trading.
Publish date:

Updated from 5:05 p.m. EST


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said Tuesday it's planning to slash more than 15,000 full-time and contractor positions and further cut output to better cope with the downturn afflicting economies around the world.

By the end of 2009, more than 13,500 employees, or 13% of the company's global workforce, will be let go. Additionally, 1,700 contractor positions will be eliminated. At the same time, Alcoa has instituted a salary and hiring freeze.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, president and CEO of Alcoa, in a prepared statement. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in today's challenging markets while also emerging even stronger when the economy recovers."

As for its production curtailments, Alcoa said smelting capacity will be reduced by more than 135,000 metric tons a year, taking its overall planned cutback in primary aluminum to more than 750,000 tons annually. That's roughly 18% of total output. Alumina production will also be reduced.

Shares of Alcoa were down 3.1% at $11.74 in extended trading.

In its statement released after the regular session closed, Alcoa also said it plans to shed four businesses -- electrical and electronic systems, global foil, cast auto wheels and its European transportation products unit. The businesses to be sold had combined revenue of $1.8 billion last year, and their sale should create proceeds of about $100 million.

Additionally, Alcoa is sharply lowering its capital spending for this year, saying it will likely be around $1.8 billion, down 50% from 2008.

Total charges for the fourth quarter, which will mostly be noncash, are expected to be between $900 million and $950 million, or $1.13 to $1.19 a share. The restructuring and divestiture program should save approximately $450 million, before taxes, on an annualized basis, Alcoa said. The company is scheduled to report its quarterly results next week.

Most other metals stocks, including

Rio Tinto



Arcelor Mittal

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U.S. Steel

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, were slightly lower in the after-hours session.

This article was written by a staff member of TheStreet.com.