The largest American aluminum producer, Alcoa, has announced that it will split into two companies, whose shares will be publicly traded, signaling that its traditional aluminum production operations and new ventures focused on automotive and aerospace businesses are no longer compatible.
The traditional metal smelting operations of this American company have been impacted by a significant surplus of aluminum in the market, causing price declines and the worst crisis in the industry in recent years. At the same time, the company sees its future in the growing sales of titanium, which yields higher margins, and higher-strength aluminum for the aerospace industry, supported by an increasingly thick order book from the aerospace and automotive sectors. Aerospace manufacturers have shifted from aluminum to lighter titanium, while vehicle manufacturers are opting for new, stronger aluminum alloys instead of steel to enhance performance and efficiency of vehicles.
The split of Alcoa is expected to be executed in the second half of 2016, with the aluminum production company retaining the name Alcoa, according to the company. Approval from investors is not required for the company split, sources say.
The aluminum business generated $13.2 billion in revenue and an EBITDA of $2.8 billion in the year ending June this year, with 64 smelters and approximately 17,000 employees.
The other company resulting from the split of Alcoa had revenues of $14.5 billion, an EBITDA of $2.2 billion during the same period, and employed 43,000 workers across 157 facilities. Through a series of acquisitions, the company claims to be well-positioned to benefit from the growing aerospace and automotive markets in the coming years.
