Alcoa

Performance indicators

2022: Loss of $102 million

On January 18, 2023, the American metallurgical company Alcoa, one of the top 10 aluminum producers in the world, published its financial performance. In 2022, Alcoa received revenue of $12.45 billion. This is 2% more compared to 2021, when the figure was $12.15 billion. The growth was primarily due to higher prices for aluminum and alumina. It is said that the average annual sale price of aluminum among third parties increased by 20%, alumina - by 18%. At the end of 2022, Alcoa suffered net losses of $102 million, while in 2021, net profit of $429 million was shown.

Aluminum supplies during 2022 decreased by 15% due to reduced demand, the closure of the smelter in San Ciprian (Spain) and the lack of shipments in the first quarter of 2021 due to the sale of the Warrick rolling plant (Indiana, USA) in April 2021. The bulk of the decline in supplies came from commercial aluminum. Shipments of value-added products decreased year-on-year by approximately 1%. Alumina supplies decreased on an annualized basis by 5%.

Financial indicators for 2021 and 2022

Production in the alumina segment decreased by 5% compared to 2021, mainly due to a decrease in output at Australian processing plants and a partial closure of the processing plant in San Ciprian. Aluminum production decreased year-on-year by 8%, primarily due to the closure of the San Ciprian smelter. Even the increase in capacity of Aluminum (Brazil) and Portland Aluminum (Australia) did not help to compensate for this decline.

In 2023, Alcoa forecasts total shipments of alumina, including supplies from external sources, in the range from 12.7 to 12.9 million metric tons, which is 0.5 million metric tons less than in 2022. Aluminum shipments are expected to range from 2.5 to 2.6 million metric tons.^[1]

2015

The net loss of the American aluminum giant Alcoa Inc. at the end of 2015 amounted to $121 million, the company said. In 2014, the company made a net profit of $268 million^[2].

Revenue in 2015 decreased by 6% to $22.5 billion, EBITDA - by 8.7% to $3.25 billion. EBITDA margin was 14.4% versus 14.9% a year earlier. The company's total debt grew by 3% to $9.1 billion, including net debt of $7.18 billion.

At the end of the reporting period, the company reduced alumina production by 5.3% in annual terms to 15.72 million tons. Alcoa's primary aluminum output declined 10% year-on-year to 2.811 million tonnes, compared to 3.125 million tonnes in 2014.

According to the results of the IV quarter, the output of alumina was at the level of 3,856 million tons (-2.5% compared to the III quarter of 2014), aluminum - 699 thousand tons (at the level of the previous quarter).

In 2016, Alcoa expects global demand for aluminum to grow by 6% compared to 2015 to 60.5 million tons, the company said. At the same time, Alcoa predicts that in 2016 the deficit of aluminum in the global market will amount to 1.2 million tons, alumina - 2.8 million tons due to the closure of capacities around the world.

History

2000: International Expansion

In the last decades of the twentieth century, there was a rapid growth in this industry. Alcoa responded to increased competition by increasing its technical base, improving technology, reducing costs, expanding the range of products, markets and activities in different countries, as well as developing an unprecedented base of natural resources around the world.

In the late 1990s and early 2000s, Alcoa significantly increased its presence in different countries of the world due to domestic growth, international cooperation and large acquisitions in Europe and the United States.

Aluminum is preferred in the production of convenient packaging, new generations of aircraft and cars and thousands of other modern products, which have become stronger, safer, lighter, their production is less energy intensive, and recycling is more efficient.

1907: Name change to Aluminum Company of America (Alcoa)

By 1907, the sprawling company already had bauxite mines in Arkansas, a purification plant in Illinois, and three smelters in New York and Canada. The owners changed the name of the company to a more appropriate one - "Aluminum Company of America." Later, when the company began to open its branches in different countries of the world, this name turned into Alcoa Inc.

In the late 1930s, a pound of aluminum cost 20 cents, and more than 2,000 items were produced from the company's products. Then the Second World War began. Demand for aluminum doubled, as did Alcoa's production. But much of the new capacity was funded by the federal government, and after the war these plants were sold to rival companies.

1888: Creation of Pittsburgh Reduction Company

Hall found his sponsors in nearby Pittsburgh. It was a group of six industrialists led by Alfred E. Hunt. These brave entrepreneurs formed the Pittsburgh Reduction Company and built a small factory where the Pittsburgh Strip is now located. On Thanksgiving Day in 1888, Hall and his first salaried employee, Arthur Vining Davis, produced the first batch of industrial aluminum using Hall technology.

The mountain of bullion grew, and there were no buyers. Manufacturers were afraid to engage in unfamiliar metal. To set an example, Davis began to make some products, starting with an aluminum kettle.

In the meantime, Hall continued to improve his technology and develop alloys. He managed to reduce the cost of aluminum in bars from $4.86 per pound in 1888 to 78 cents in 1893.

Production grew, and soon kitchen utensils, foil, electric wires and cables, car bodies and engine parts were made from aluminum, used in the first Wright Brothers aircraft tested at Cape Kitty Hawk.

1880s: Hall experiments with aluminium production

Oberlin College Professor at Ohio State Frank Juit showed his chemical students a piece of aluminum and said that whoever can discover an economical way to produce this metal will become rich.

One of those students, Charles Martin Hall, experimented with minerals from the age of 12, turning a small wooden shed behind the house into a makeshift laboratory.

After graduating, he continued his experiments in the barn. He learned how to extract alumina - alumina - and created his own carbon crucible with a cryolite bath that contained alumina and passed an electric current through it.

The result is a solidified mass. He let her cool and then smashed her with a hammer. And I found some small balls of pure aluminum.

It was a remarkable discovery. But to go further, Hall needed money.

Business in Russia

Alcoa production facilities in Russia

At the beginning of 2016, Alcoa owns the Samara Metallurgical Plant in Russia (since July 2009 - Alcoa SMZ). At the end of March 2015, Alcoa sold 100% of the shares of Alcoa Metallurg Rus CJSC (until July 2009 - Belokalitvinsky Metallurgical Production Association). Alcoa acquired two of these plants from RusAl in 2005 for $257 million^[2].

CJSC Alkoa SMZ is the largest enterprise in Russia for the production of aluminum semi-finished products.

According to 2012 data, Alcoa SMZ's share in the Russian aluminum rolled products market is about 40%.

Alcoa SMZ CJSC is:

• total land area - 1,380,000 sq. m.
• total area of buildings and structures - 680,000 sq. m.

Alcoa SMZ CJSC has 3 business units:

• Foundry
• Rolling production
• Press production (it includes the group for the production of forging products - forging and stamping)

Alcoa SMZ CJSC produces a wide range of sheet rolling, press and forging products:

• rolls, including can tape (body, key, lid), can tape, painted tape, sheets;
• profiles, panels, pipes, punching and forging, including oversized

History

2015: Alcoa sells 100% stake in Alcoa Metallurg Rus CJSC

At the end of March 2015, Alcoa sold 100% of the shares of Alcoa Metallurg Rus CJSC (until July 2009 - Belokalitvinsky Metallurgical Production Association). Alcoa acquired two of these plants from RusAl in 2005 for $257 million^[2].

Buyer of the Belokalitva Metallurgical Production Association (Alcoa Metallurg Rus CJSC; AMR, Rostov Region) was performed by Lainen CJSC. General Director of Lainen CJSC Vladimir Chertovikov told Izvestia that the deal was closed. The final buyer of the enterprise in Bela Kalitva was the Stupin Titanium Company.

• Lainen

  is a subsidiary of the Stupinsky Titanium Company (STK), says Chertovikov.

Back in January 2015, the Federal Antimonopoly Service granted the petition of Lainen CJSC to buy a 100% stake in Alcoa Metallurg Rus CJSC. According to SPARK-Interfax, 100% of STK belongs to Nikolai Timokhin, Lainen with an authorized capital of 10 thousand rubles was created in August 2014.

- The plant in Bela Kalitva produces products in our profile, STK produces about 100 tons of titanium products monthly for the aviation industry. AMR has interesting technologies and equipment, the use of which will give a synergistic effect to both enterprises. We are going to increase production in Kalitva to increase export supplies. Now the load of the plant is about 20 thousand tons per year. The crisis is not a hindrance to us, on the contrary, due to low ruble costs, this is our chance to enter Western markets, "Vladimir Chertovikov explained to Izvestia the reason for buying the Alcoa-owned plant^[3] Alcoa^[3]

Alcoa itself assures that the sale of AMR is due to the fact that the plant does not fit into the company's new strategy, which was adopted in 2013. According to it, Alcoa should strengthen its position in the main growth markets: automotive, aircraft and the market for household appliances and packaging.

- The decision to sell the enterprise is not related to the US sanctions against Russia, any business transformation actions considered by Alcoa are in line with the company's strategy, in which it concentrates its development in markets and products with high growth potential, - a representative of Alcoa told Izvestia.

At the same time, in the spring of 2014, Alcoa President and Executive Director Klaus Kleinfeld refused to travel to the St. Petersburg International Economic Forum (SPIEF-2014). As representatives of the press service of the company, which ranks third among the largest aluminum producers in the world, told reporters at the time, this decision was made due to pressure from the US authorities.

However, as analysts have repeatedly argued, many owners of American companies with assets in Russia have long been trying to minimize contracts and sell local assets.

- Russia for Alcoa was a promising, but not the most important market, - notes one of them.

Representatives of Linen and Alcoa refused to name the amount of the deal.

Leonid Khazanov, deputy editor-in-chief of Metallosupply and Sales magazine, believes that the cost of AMR may be equal to the amount that Alcoa has invested in the enterprise in the form of investments since its purchase in 2005, that is, about $160 million. Alcoa, according to him, has successfully modernized the enterprise, but now it is underutilized.

• For

  the Stupino company, which supplies the products of the aerospace industry of Russia, the plant in Belaya Kalitva will give access to new customers, says Khazanov.

Alcoa bought the Samara Metallurgical Plant (Alcoa SMZ) and the Belokalitvinsky Metallurgical Production Association (Alcoa Metallurg Rus) in 2005 for $257.5 million from Oleg Deripaska's Russian Aluminum. Alcoa's total investments in the acquisition and modernization of plants amounted to more than $850 million at the beginning of 2015. SMZ accounted for $450 million, the plant in Kalitva - $160 million.

- In 2014, the plant in Belaya Kalitva made a profit for the first time, - a company representative told Izvestia.

Factories in Samara and Kalitva produce rolls, including can tape, can tape, painted tape, sheets, profiles, panels, pipes, stamping, forging, dishes.

The company has been preparing the deal for a long time. Thus, AMR until October 2014 owned 100% of the shares of Samara CJSC Alkoa SMZ, the second Alcoa plant in Russia. In September, Alcoa reduced the authorized capital of AMR to 3.14 billion rubles from 8.83 billion rubles, transferring SMZ shares to Alcoa Rus Investment Holdings parent LLC.

Alcoa plans to receive $1 billion in additional revenue in 2016 by optimizing/revising rolling capacity worldwide. In 2014, the company already closed two rolling plants in Australia and sold three European facilities.

2012: Investment Program

In 2012, based on the current forecasts for the development of the global and Russian aluminum markets, investments are directed to the entire range of products from aluminum alloys of foundry, rolling, forging and press industries, which provide their products to the most dynamically developing segments of the Russian economy.

The investment program implemented at CJSC Alcoa SMZ includes:

• Foundry: the development of the production of high-quality ingots for the manufacture of semi-finished products for the aviation and space, construction and food industries.
• Press production: the development of the production of semi-finished products for the oil and gas and construction industries.
• Blacksmithing: development of large-size forging and stamping production for the aviation and space industries
• Rolling production: the development of flat rolled products for the aviation and space, construction, canning and food industries.

Notes