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Alcoa to split downstream business segments as its value-add portfolio expands

24th July 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Lightweight and high-performance metals producer Alcoa will split its downstream portfolio into two segments, with one maintaining a core focus on aerospace and the other centred on the construction and commercial wheels markets.

NYSE-listed Alcoa had also closed the acquisition of vertically integrated titanium and specialty metal products supplier RTI International Metals in a stock-for-stock transaction with an enterprise value of $1.5-billion.

Alcoa had been transforming its business focus in recent years, increasingly depending on the higher-margin downstream market.

Combined with its other recent acquisitions of Firth Rixson and TITAL, as well as other innovation-led organic growth investments, Alcoa continued to deepen its reach into the high-growth aerospace market.

The Engineered Products and Solutions (EPS) segment, led by group president Olivier Jarrault, had been streamlined to enable a core focus on Alcoa’s position as an aerospace partner. The EPS group would comprise business units that primarily catered to the aerospace market through Alcoa Titanium & Engineered Products, the designation for the newly acquired RTI business, Alcoa Fastening Systems & Rings, and Alcoa Forgings & Extrusions, into which the Firth Rixson business had been integrated, and Alcoa Power & Propulsion, which now included the TITAL business.

Alcoa had formed a new business segment, Transportation and Construction Solutions, incorporating the Alcoa Wheel & Transportation Products, and Alcoa Building & Construction Systems business units, both previously part of EPS.

Alcoa said it hoped the new group structure would drive a successful expansion into emerging regional markets, where both these business units had significant opportunity, in addition to capturing continued growth in existing markets. To build on the exciting growth prospects for Alcoa in emerging markets, Latin American regional president Jose Drummond had been appointed to lead the group as president of Alcoa Transportation and Construction Solutions. He would also maintain his regional president role.

“These changes provide important leadership and organisational advances in support of our transformation strategy. As Alcoa builds out its downstream portfolio, our growth prospects in the aerospace industry and across emerging markets continue to widen.

“This realignment optimises our organisational structure and expands our leadership capabilities to more rapidly capture profitable downstream growth,” Alcoa chairperson and CEO Klaus Kleinfeld said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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