Aluminum maker Alcan Inc., based in Montreal with U.S. headquarters in Cleveland, posted operating earnings of $144 million in its 2003 second quarter, but ended the quarter with a net loss after writing off divested assets and foreign currency transactions.
The net loss figure included a $113 million after-tax charge on the proposed sale of packaging assets. In a news release accompanying its earnings announcement, Alcan says, “A decision to sell non- strategic packaging operations to release cash for higher value-adding opportunities [led to a] difference between the expected proceeds on sale and the book value of these assets, result[ing] in a non-cash, after-tax impairment charge of $113 million.”
According to the company, second quarter operating earnings from continuing operations were affected by a $15 million increase in pension expenses, rising energy and scrap metal costs, the negative impact of strengthening European currencies (other than the Euro) and higher depreciation expenses.
On the positive side of the ledger, the company sites ongoing cost improvement initiatives, higher overall volumes and stronger pricing as helping to offset the higher costs and keep the company’s operations in the black.
For the quarter, net income from continuing operations of $24 million compared to $72 million in the year-ago quarter and $13 million in the previous quarter. The differences were largely due to the unfavorable effects of foreign currency balance sheet translation, the company says.
Alcan is currently involved in a bid for French aluminum company Pechiney. If the $4 billion deal goes through, Alcan would surpass Alcoa Inc., Pittsburgh, as the world’s highest-revenue aluminum company.
In 1999, Pechiney backed out of a proposed three-way merger with Alcan and Swiss company Alusuisse (Algroup) after European Union regulators erected barriers to the deal. Alcan subsequently acquired Algroup.
Alcan is among the largest aluminum scrap consumers in North America, particularly of aluminum used beverage containers (UBCs) at three U.S. facilities.