- The Washington Times - Thursday, January 9, 2003

PITTSBURGH (AP) Alcoa Inc. announced plans yesterday to cut 8,000 jobs this year and sell several less-profitable, non-core businesses. The news came as the world's largest aluminum producer reported a wider-than-expected fourth-quarter loss.
In addition to the job cuts, which account for 6 percent of the company's global work force and come on top of 10,000 cuts in 2002, the company has reviewed all of its businesses ranging from alumina the raw material used to make many aluminum products to automotive supplies.
Alcoa had expected market losses in aerospace and other industries to flatten out, yet Alcoa's sales continued to slide.
"Global manufacturing weakness has persisted longer than we anticipated," said Alain Belda, Alcoa chairman and chief executive officer. "In particular, aerospace, industrial gas turbine and telecommunication markets remained soft, reinforcing the need to increase the scope of our cost savings."
For the quarter ended Dec. 31, the company lost $223 million, or 27 cents per share. Revenue slipped to $5.06 billion from $5.10 billion a year earlier.
The results included a $95 million after-tax charge to restructure businesses in the aerospace, automotive and industrial gas turbine markets, and in U.S. smelting operations.
The loss was worse than the 25 cents per share predicted by analysts surveyed by Thomson First Call and far wider than the year-ago loss of $142 million, or 17 cents per share.
Shares of Alcoa fell $2.53, or 10.4 percent, to close at $21.85 on the New York Stock Exchange.
Pittsburgh-based Alcoa, which cut 10,000 jobs in 2002 to end the year with 127,000 employees, said most of the latest job cuts would be in Europe and South America. But sales of underperforming businesses would include domestic interests, officials said.
While the company would not release many details of its plans, Alcoa officials said one U.S. company that will go on the block is Kwaneer North America, an architectural aluminum building products company based in Norcross, Ga.
Three Arkansas plants, in Bauxite, Magnolia and Springdale, which make everything from window grids and chemicals to bath-enclosure systems, also are on the block. A plant in Russellville, Ark., which makes foil, has been for sale since November.
Alcoa, which was headed by former Treasury Secretary Paul H. O'Neill for 13 years before his appointment to the Cabinet two years ago, already had embarked on accelerated cost-cutting efforts throughout 2002 as shares fell by 36 percent.
Wall Street had expected a weak quarter, but yesterday's report caught analysts by surprise.
"It's a lot weaker than anyone expected," said Stephen Bonnyman, an analyst with Bear Stearns. "The key themes that really stand out of this report are the special divisions. Their penetrations into these markets are much weaker than expected."

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