8:00AM New York-The world’s third largest aluminium company Alcoa reported first quarter net income fell 54% to $303 million from $662 million a year ago on rising energy prices and weak dollar.

Quarterly Earnings Review

Alcoa reported revenues in the first quarter ended March 31st was flat at $704 million as low metal prices and rising energy costs reduced earnings. Revenue in the first quarter was $7.4 billion, flat from a year ago, but up 6% excluding the revenue from packaging and consumer business which was sold in February 2008.

For the quarter, net income fell 54% to $303 million from $662 million a year ago. Basic earnings per share fell to $0.37 per share from $0.75 per share in the same period a year earlier.

Excluding restructuring and tax impacts, income from continuing operations rose 20% from the previous quarter to $361 million or $0.44 per share.

Also capital expenditures in the period rose to $748 million.

Segment Review

During the first quarter of the year the company discontinued the extruded and end products segment to focus on its core business. And, packaging and consumer segment was sold during the same period.

Alcoa also funded numerous growth investments in the quarter including the new Juruti bauxite mine and Sao Luis refinery in Brazil, the strategic investment with Chinalco in Rio Tinto plc and the acquisition of two aerospace fastening companies.

Alumina

Lower pricing, higher energy cost and an inauspicious exchange rate adversely affected profitability.

As a result after tax operating income fell 18% or $36 million to $169 million. Though production rose marginally, exports declined 2%.

Primary metals

Operating income after tax rose 57% or $111 million to $307 million compared from the previous quarter when earnings were driven mainly by high metal prices.

Throughput also increased 4% during the period under review due to the continued ramp-up of the Iceland smelter offset by unfavorable currency and increased carbon costs.

The segment purchased approximately 49 kmt of primary metal for internal use.


Flat-Rolled Products

After tax operating income was $41 million, an increase of $56 million from the previous quarter buoyed by strong performance in Russia and higher volumes and an improved mix that helped to offset higher energy and alloy material costs.

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