Alcoa jumps from loss to net income of $159 millionStaff writer ▼ | January 14, 2015
Alcoa reported a jump in fourth quarter and full-year 2014 profits, culminating a year of significant transformation for the company.
The fourth quarter A significant transformation for the company
Year-over-year, fourth quarter 2014 results are up from a net loss of $2.3 billion, or $2.19 per share. Excluding the impact of special items, fourth quarter 2014 net income was $432 million, or $0.33 per share, which rose significantly from fourth quarter 2013 net income of $40 million, or $0.04 per share.
Fourth quarter 2014 revenue was $6.4 billion, up 14 percent from $5.6 billion in fourth quarter 2013. Higher sales in Alcoa's value-add businesses, comprising the mid and downstream, favorable metal prices and energy sales drove the company's year-over-year revenue increase.
Engineered Products and Solutions reported its 19th consecutive quarter of year-over-year after-tax operating income growth, excluding Firth Rixson. Global Rolled Products continued to benefit from the historic shift to aluminum intensive vehicles, shipping a record volume of automotive sheet.
In Global Primary Products, comprising Alumina and Primary Metals, the Alumina segment's profitability more than doubled year-over-year. Primary Metals adjusted EBITDA per metric ton was the strongest since second quarter 2008, primarily reflecting a lower cost, globally competitive commodity business.
Special items in fourth quarter 2014 included $200 million in restructuring-related costs, approximately 80 percent non-cash, primarily tied to the sales of three European rolling mills and an ownership stake in a bauxite mining and alumina refining joint venture in Jamaica.
In 2014, Alcoa reported net income of $268 million, or $0.21 per share, compared to a net loss of $2.3 billion, or $2.14 per share, in 2013.
Excluding the impact of special items, strong performance growth drove 2014 net income of $1.1 billion, or $0.92 per share, up slightly more than threefold from 2013 net income of $357 million, or $0.33 per share. Revenue in 2014 was $23.9 billion, up 4 percent from $23 billion in 2013.
In 2014, Alcoa continued to execute against its financial targets. The company achieved $1.2 billion productivity savings, exceeding an $850 million annual target; managed growth capital expenditures of $484 million against a $500 million annual target and controlled sustaining capital expenditures of $735 million against a $750 million annual target. Progress on the Saudi Arabia joint venture project remained on track with $91 million invested in 2014 against a $125 million annual target.
For full-year 2014, Alcoa delivered $455 million in positive free cash flow. The company produced $989 million of free cash flow in fourth quarter 2014, the highest since fourth quarter 2010.
For full-year 2014, Alcoa's cash from operations totaled $1.7 billion. In fourth quarter 2014, the company's cash from operations was $1.5 billion, a quarterly record.
Fourth quarter average days working capital held steady year-over-year at 28 days. The company has reduced average days working capital by 9 days since 2009.
The company's debt totaled $8.9 billion at the end of 2014, with cash on hand of $1.9 billion. Alcoa's debt-to-capital ratio stood at 37.4 percent, with net debt-to-capital at 32 percent. ■