Alcoa (AA) Slashes 15K Job, Cuts Production and Capex
Alcoa (NYSE: AA) announced a number of actions to conserve cash, reduce costs and strengthen the Company's competitiveness. The company said it will curtail production, cut its workforce by 13,500 jobs, and reduce capital expenditures in 2009 by 50%.
On the production cuts, the company announced further smelting reductions of more than 135,000 metric tons per year (mtpy) will be implemented resulting in reduction of total primary aluminum output by more than 750,000 mtpy, or 18 percent of annualized output.
Alcoa will reduce its headcount by more than 13,500 employees or 13 percent of the Company's worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated. The Company has also instituted a global salary and hiring freeze.
Alcoa will also streamline its portfolio, including Alcoa and ORKLA exchanging their stakes in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices. Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. Expected net proceeds for the divestitures are estimated to be approximately $100 million.
Alcoa also said it is stopping all non-critical capital investment, which is in addition to the previously announced initiative to suspend the Company's share repurchase program. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50 percent decrease from 2008, and will be $1.5 billion after partner contributions.
Total charges for the 4th quarter 2008 due to restructuring, impairment and other special charges are expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash. The restructuring and divestiture program is expected to save approximately $450 million before taxes on an annualized basis.
On the production cuts, the company announced further smelting reductions of more than 135,000 metric tons per year (mtpy) will be implemented resulting in reduction of total primary aluminum output by more than 750,000 mtpy, or 18 percent of annualized output.
Alcoa will reduce its headcount by more than 13,500 employees or 13 percent of the Company's worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated. The Company has also instituted a global salary and hiring freeze.
Alcoa will also streamline its portfolio, including Alcoa and ORKLA exchanging their stakes in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices. Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. Expected net proceeds for the divestitures are estimated to be approximately $100 million.
Alcoa also said it is stopping all non-critical capital investment, which is in addition to the previously announced initiative to suspend the Company's share repurchase program. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50 percent decrease from 2008, and will be $1.5 billion after partner contributions.
Total charges for the 4th quarter 2008 due to restructuring, impairment and other special charges are expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash. The restructuring and divestiture program is expected to save approximately $450 million before taxes on an annualized basis.
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