Alcoa recorded a loss for the 4th quarter of 2002. They sited a global manufacturing weakness that has persisted for longer than anticipated as a major contributing factor.
Areas that remained soft, suffering from the poor manufacturing climate included aerospace, industrial gas turbine and telecommunications.
Following this announcement they have also decided to accelerate their cost reduction initiatives and to focus on their business portfolio to increase long-term earnings power. Restructuring and sale of non-core businesses are key areas that will be addressed in the cost reduction exercise.
After having conducted a portfolio review, Alcoa have decided to divest businesses which are not expected to grow in excess of GDP or deliver superior returns. Consequently they are looking to divest sectors such as:
- Alumina and chemicals
- Building and construction
- Automotive and general industrial
Amongst the businesses to be divested are specialty chemicals, specialty packaging equipment, architectural products in North America, commodity automotive fasteners, certain fabricated operations in South America, a minority equity stake in Latasa and foil facilities in Missouri and Arkansas. Proceeds from these sales will contribute towards debt reduction.
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