Alcoa (New York) will explore strategic alternatives for the disposition of its Packaging and Consumer segment which generated approximately $3.2 billion in revenues and $95 million in after-tax operating income in 2006, representing approximately 10% of Alcoa 2006 revenues and approximately 3% of after-tax operating income.
“Our packaging and consumer business is improving and strengthening. In fact, first quarter earnings more than doubled compared to the prior year as the benefits of our restructuring program are hitting the bottom line,” said Alain Belda, Alcoa Chairman and CEO. “However, now is the right time for us to explore whether these businesses may provide more value on their own or as part of another company.”
Businesses that will be included in the review of strategic alternatives include:
Flexible Packaging, manufacturers of laminated, printed, and extruded non-rigid packaging materials such as pouch, blister packaging, unitizing films, high quality shrink labels and foil lidding for the pharmaceutical, food & beverage, tobacco and industrial markets.
Closure Systems International, a global manufacturing leader of plastic and aluminum packaging closures and capping equipment for beverage, food and personal care customers.
Consumer Products, a leading manufacturer of branded and private label foil, wraps and bags.
Reynolds Food Packaging, makers of stock and custom products for the foodservice, supermarket, food processor and agricultural markets including foil, film, and both plastic and foil food containers.
In total, these packaging businesses have approximately 10,000 employees in 22 countries around the world.
Separately, the company said it will explore strategic alternatives involving its Electrical and Electronic Solutions (formerly the AFL wireharness business), and automotive castings businesses. These businesses had combined 2006 revenues of approximately $1.6 billion and were marginally profitable.
“While there can be no assurance that exploration of alternatives will result in any type of transaction, this initiative should unlock the value in these businesses,” said Belda.
“We are in an enviable position with our other downstream businesses,” added Belda. “The group of assets in our Flat Rolled Products segment is without question the best in the world, as are our hard alloy extrusions, forgings, fasteners, investment castings, structures and building systems. Our proprietary technology and unique equipment set us apart from anyone else in the world in these areas.”
The Company anticipates the process will be completed by the end of 2007.