Alcoa’s 4Q Profits Jump 23 Percent
PITTSBURGH (AP) _ Aluminum maker Alcoa Inc. reported Friday that its earnings soared 23 percent in the fourth quarter thanks to cost reductions and increased sales. The company’s stock jumped 10 percent on the news.
Alcoa earned $218.3 million, or $1.19 per share, compared to $177.6 million, or $1.23 per share, in the fourth quarter of 1997.
The earnings topped analysts’ expectations of $1.06 per share, as reported by First Call Corp. The company’s stock lept 10 percent, or $7.75, to $85 in afternoon trading on the New York Stock Exchange.
Revenues for the three months ending Dec. 31 were $4.2 billion, compared to $3.3 billion during the same period last year.
Also Friday, Alcoa announced a 50 percent increase in the company’s quarterly stock dividend to 37.5 cents per share on a pre-split basis, a 10 million share repurchase program and a two-for-one stock split.
After the split, Alcoa will have about 367 million common shares outstanding. The new stock will be distributed on Feb. 25 to shareholders of record at the close of business on Feb. 8.
``These changes reflect our conviction that we have achieved a new base level of operating performance and that further major improvements will be realized this year,″ said Alcoa chairman and chief executive officer Paul O’Neill.
Alcoa, the world’s largest producer of aluminum, shipped nearly 1.2 million metric tons of aluminum products in the last quarter of 1998, compared with 734,000 metric tons in the same quarter of 1997.
Net income in the 1998 fourth quarter included after-tax losses of $900,000 for marking to market some aluminum commodity contracts. In 1997, the same losses amounted to $11.7 million.
The quarter included an after-tax gain of $32.7 million from the sale of Alcoa’s Brazilian cable business and a land sale in Japan. The net income increase excludes that special item.
For all of 1998, Alcoa had a profit of $853 million, or $4.87 per share, up 12 percent from 1997, when profits totaled $761.2 million, or $4.66 per share.
The attributed its improved performance for the year in part to the acquisition of two companies: Inespal, Spain’s state-held aluminum business, and Alumax of Atlanta.
Those factors helped the company overcome a 20 percent decline in aluminum prices since the beginning of the year, O’Neill said.
Revenues for all of 1998 were $15.3 billion versus $13.3 billion for 1997.