Montreal, Canada — At its 102nd annual general meeting of shareholders today, Alcan Inc.(NYSE, TSX: AL) said 2003 was an eventful and financially successful year marked by a strong financial performance and the successful acquisition of Pechiney, both of which will stand out as significant milestones in the organization's continuing growth and development.
"As the theme of this year's annual report suggests, actions do speak louder than words," said Travis Engen, President and CEO of Alcan Inc. "Over the past year, we've shown that we can 'walk the talk' that our value-based approach really does work. The demonstrated ability to deliver on our commitments has had a positive impact on every facet of the Alcan's operations: it helps position the Company as a preferred supplier, a sought-after partner, a favoured employer, a valued member of the community — and, certainly not least — an attractive investment vehicle."
Alcan has continued using its strong cash flow to selectively grow the company through acquisitions, the largest being Pechiney, which was launched in July 2003 and completed in December 2003.
"This is a winning combination that strengthens Alcan's competitive position as one of the world's leading aluminum and packaging companies, while providing very attractive strategic options for the future. The combined entity will benefit from increased opportunities to leverage Pechiney's state-of the-art smelting technology, a larger and more diversified position in low-cost primary aluminum production, an advanced aluminum fabricating business with a leading position in aerospace, and a global packaging business with a leading position in flexible packaging," said Mr. Engen.
Excellence in corporate governance and sustainability
Alcan's stellar performance in two key areas, sustainability and corporate governance have placed it among the ranks of the world's most respected corporations stated the Chairman of Alcan's Board of Directors, L. Yves Fortier.
"The Company has long been committed to the highest levels of governance, which we believe is essential to its success and to the objective of maximizing shareholder value. The Board regularly reviews our governance practices in light of developing requirements, implementing changes where appropriate to ensure that we remain at the forefront in terms of effective disclosure and best practices," said Mr. Fortier.
Alcan's commitment to sustainability was also highlighted as a fundamental operating tenet and crucial to the best interests of shareholders.
"At the heart of today's business case for global success lies a cycle of economic, environmental and social interconnections. A company cannot be sustainable over the long term if it is not economically viable. And by the same token, no company can be economically viable in the 21st century if it fails to accept its environmental and social responsibilities," explained Mr. Fortier.
Emphasizing its importance, Mr. Engen also spoke to shareholders about sustainability, which along with Alcan's governing objective of Maximizing Value, and company-wide initiatives such as EHS FIRST and Continuous Improvement, has become an integral part of Alcan's forward-looking business model and influences how the Company establishes priorities, shapes strategies and chooses between alternatives. This approach was reflected in a recent reappraisal of Alcan's community investment strategy.
"At last January's high-profile World Economic Forum in Davos, Switzerland, we announced the creation of a US$1-million annual prize to recognize outstanding contributions to the goal of sustainability from the not-for-profit sector. We expect the first recipient to be named later this year," said Mr. Engen. "In a similar vein, we also announced recently that Alcan would become lead corporate sponsor for the Vancouver-based +30 Network initiative, whose aim is to create a global network of cities sharing expertise on sustainable urban planning."
2003 Financial Results
Despite a turbulent environment defined by a soft economy, mixed metal prices, volatile currency markets and intense cost pressures, Alcan delivered a strong financial performance in 2003, highlighted by:
A record $1.8 billion cash from operating activities
An increase in free cash flow from continuing operations of $44 million to a record $734 million
An improvement in operating income to $556 million compared with $537 million in 2002.
By concentrating on controllable aspects, Alcan managed to offset higher costs for recycled metal, energy and pensions. The Company also succeeded, once again, in keeping capital expenditures below depreciation. The combination of this strong financial performance and aggressive progress on the value agenda was reflected in the development of Alcan's share price, which began 2003 at $29.52 / $46.33 on the NYSE/TSX and ended the year at $46.95/ $60.57
Statements made which describe the company's intentions, expectations or predictions may be "forward-looking statements" within the meaning of securities laws. By their nature, forward-looking statements involve risk and uncertainty; the company's actual results could differ materially from those expressed or implied in such forward-looking statements. Certain non-generally accepted accounting principles measures are presented; these are reconciled to comparable generally accepted accounting measures on the company's website at www.alcan.com in the "investors" section.
Alcan is a multinational, market-driven company and a global leader in aluminum and packaging, as well as aluminum recycling. With world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing, today's Alcan is even better positioned to meet and exceed its customers' needs for innovative solutions and service. Alcan employs 88,000 people and has operating facilities in 63 countries.
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