Alcan Sees Drop for Quarter; Plans Cuts

Alcan Inc. reported third quarter net income, excluding non-recurring items and foreign currency translation effects, of $121 million compared to $128 million in the second quarter of last year.

Including non-recurring items and foreign currency translation effects, net income for the quarter was $151 million compared to $74 million in the previous quarter.

Commenting on the results, Travis Engen, President and Chief Executive Officer, said, "We are pleased with the operating performance and the increase in operating cash flow, despite the ongoing economic weakness and declining aluminum prices."

"We expect business conditions to continue to be challenging", he continued. "However, Alcan is well positioned given its sound financial situation, the positive contribution from the new smelter in Alma, which has now reached full operating capacity, and the impact of earnings improvement measures presently in place. In addition, we are implementing a restructuring program aimed at safeguarding our competitiveness. This is expected to have a positive impact of approximately $200 million on annual pre-tax earnings when fully implemented."

During a conference call, Engen said the company will cut from 5 percent to 7 percent of its 52,000-person staff, and record a one-time charge of $250 million in the fourth quarter.

Alcan said it expects business conditions to be challenging for at least the first six months of 2002 and added that it is still comfortable with analysts' average estimate for year-end 2002 earnings of $2.77 a share based on the assumption of an average selling price of $1,565 per ton of aluminum.

Sales in the third-quarter rose to $3.16 billion from $1.98 billion in the year-ago quarter. Total aluminum volume was 1.049 million tons, compared with 824,000 tons a year earlier.

Sales in the third-quarter rose to $3.16 billion from $1.98 billion in the year-ago quarter. Total aluminum volume was 1.049 million metric tons, compared with 824,000 metric tons a year earlier.