"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, President and CEO of Alcoa Inc. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in today's challenging markets while also emerging even stronger when the economy recovers."
Targeted reductions, curtailments and plant closures and consolidations will reduce headcount by more than 13,500 employees or 13 percent of Alcoa's worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated. The company has also instituted a global salary and hiring freeze.
Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The businesses employ a combined 22,600 people at 38 locations. Expected net proceeds for the divestitures are estimated to be approximately $100 million.
Building on the previously announced initiative to conserve cash and suspend the company's share repurchase program, Alcoa announced it is stopping all non-critical capital investment. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50 percent decrease from 2008, and will be $1.5 billion after partner contributions.
Total charges for the 4th quarter 2008 due to restructuring, impairment and other special charges are expected to be between $900 and $950 million after tax, or $1.13 to $1.19 per share, of which approximately 80 percent is non-cash. The restructuring and divestiture program is expected to save approximately $450 millionbefore taxes on an annualized basis.
"Because we recently completed an extensive competitive analysis, including a strategic review of each business, we have been able to quickly identify and implement effective responses that strengthen our market competitiveness and financial staying power in the economic downturn. We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities that emerge. These are extraordinary times requiring extraordinary actions," said Kleinfeld.