- In total, these costs were up $72 million sequentially, with 40% related to energy.
- In addition, downstream segments were hurt by the well-documented end-market weakness particularly in U.S. and Europe.
- The negative impact on a sequential basis was $12 million.
- The economic impact of currency charges are in the segments and were negative. However, in this quarter the negative impact in the segments was offset by a positive translation impact which runs through corporate.
Strong cash from operations of $643 million was driven by great working capital performance where day working capital decreased by 5 days or 11%.
In the other adjustments, a major portion of it relates to the tax payment on the Chalco sale as well as the earlier described Packaging tax benefit.
- The company repurchased another 25 million shares outstanding in the quarter which gives 68 million for the year or 8% of total shares outstanding.
The Alumina segment, ATOI decreased $10 million.
- Sequentially, third party shipments were 5% higher and production was 2% higher with three refineries setting quarterly production records.
- In addition, Jamalco continues to recover from Hurricane Dean and resumed shipping product in November. However, these positives were more than offset by unfavorable currency, higher energy and price costs.
- Approximately 85% unfavorable currency impact was due to the weakening of the U.S. dollar versus the AUD dollar. 65% of the higher energy costs were associated with fuel oil. Spiking fuel costs have led to increases in shipping costs with ocean freight up 30% over last year.
Sequentially Primary Metals ATOI decreased $87 million.
- A 3% production increase and the continued recovery of Rockdale and Tennessee were offset by a decrease LME price and unfavorable currency.
- On a quarter-over-quarter comparison the Real, CAD, Euro and AUD dollar each appreciated versus the U.S. dollar between 5% and 7%.
Flat-rolled products ATOI decreased from $61 million to a loss of $16 million on a sequential basis.
On the whole, it is a significant decrease but one that can be explained by looking at the regional businesses and keeping in mind that this segment is in the midst of several major growth initiatives, as well as a temporary weakening in one of its most profitable markets.
The North American business ATOI is down $17 million due to weaker mix, general market weakness and the distributed de-stocking noted last quarter.
Many of the plants took advantage of the market weakness with planned maintenance down time.
The Europe business is down $13 million due the softness in the European markets and a weaker product mix.
Australian business is down $11 million on the heels of the announced third quarter restructuring.
- The company is currently working through headcount reductions and product rationalizations.
- In addition, the weakening of the U.S. dollar had a negative impact on the Australia operation.
- Additionally, a major driver for the decreased earnings was performance of growth locations, Russia and China.
- Combined ATOI is down $37 million sequentially. For Russia specifically the increased loss was due to higher operational energy costs and an unfavorable currency.
Engineered Solutions ATOI decreased sequentially by $2 million with improvements from the ASL restructuring, offsetting the weaker market conditions in forgings and investment castings.
- On a year-over-year basis, the Fastening Systems and Power & Propulsion businesses had outstanding years, with ATOI up 36% and 47% respectively.
- The company expects to see overall improved market conditions, the resumption of productivity gains across all businesses.
Extruded and End Products ATOI increased $3 million sequentially to $16 million.
Market and operating conditions were comparable to the third quarter, and the company expects similar performance for the first quarter of 2008.
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