Alcoa said yesterday it will close a number of plants, including a smelter in Hamburg, Germany, as part of the company long range plans to cut costs but increase aluminium production.
Alcoa , the world's largest aluminium producer, is a major supplier of packaging for the foods and drinks industry.
The company says it wants to increase its global reach to be closer to growing markets and to take advantage of being in low cost countries.
Alcoa has also been concentrating on raising aluminium production, asprices and demand for the metal continue to rise worldwide. Last year aluminium prices rose by about 23 per cent and are forecast to rise further throughout 2005.
The company said yesterday it would record an after-tax profit of $219m on the sale of its shares in Elkem, the Norwegian metals company, in the quarter. The company also expects to record a $100mto $120m net tax benefit and after-tax charges of $220m to $250m. The charges include the cost of layoffs, plant closures and consolidations.
These include the closure of an automobile parts plant in Kentucky, the sale of various US and European extrusion plants, reduction of its global packaging and consumer business and the closure theHamburger Aluminium-Werk aluminum smelter in Hamburg. The closure of the smelter was due to high energy prices, Alcoa said.
The company also said it is considering closing its Eastalco aluminum smelter in Frederick, Maryland over escalating lower power prices.
Meanwhile the company is expanding alumina refinery capacity in Australia, Jamaica, and Suriname and constructing a smelter in Iceland. It is expanding smelting capacity in Brazil, China andTrinidad and expanding fabricating capabilities in Russia. In 2004, Alcoa restarted smelting capacity at a plants in Washington state, New York state and Quebec. Once the restarts are complete, Alcoaexpects it will have the capacity to make an 361,000 tonnes of aluminium a year on a base capacity of four million tonnes.
The Iceland smelter is expected to be completed in 2007. The company is also investing in a new plant in Norway and is refurbishing a Spanish smelter.
"While capacity restarts and anticipated higher metal prices will add to revenue and profit in 2005, the company anticipates that higher energy costs will persist," Alcoa said in astatement.
Alcoa's packaging and consumer segment made a profit of $6bn in 2004, accounting for about 26 per cent of total profit. Alcoa makes bottling closures for the dairy, food and beverage industries.The division also supplies printed shrink sleeve labels. Alcoa also makes the aluminum sheet used to make 100 billion cans
The International Aluminium Institute estimates 22.6 million tonnes of aluminium were produced worldwide last year.