MONTREAL - Still holding high hopes for its controversial B.C. power and smelter project, aluminum company Alcan Inc. has swung to a fourth-quarter profit of US$422 million from a year-ago loss of US$361 million as operating cash flow hit a record high.
Net income for the quarter ended Dec. 31 amounted to $1.13 a share, contrasting with a loss of 98 cents per share a year ago, the Montreal-based company reported Wednesday.
Capping a record year, quarterly operating cash flow reached an all-time high of US$1.1 billion. the firm reports in U.S. dollars.
Analysts' consensus forecast was for earnings of $1.28 a share, before one-time items, according to Thomson Financial.
CEO Dick Evans said the fourth quarter capped an excellent year and he expects the trend to continue.
"We expect strong and supportive markets in 2007," Evans said in an interview before a conference call to discuss the results.
"Our forecast is for a slight surplus of supply over demand but you have to recognized the market is also growing..." he said.
Evans said Alcan is working on three or four other projects that haven't been announced but he noted the aluminum company already has four major smelting projects, including those in Quebec and British Columbia, on the go.
"We have a pretty full plate already and we will be putting a lot of our effort on advancing those projects in addition to continue to prospect and develop other opportunities."
Evans said Alcan will appeal a decision by the B.C. Utilities Commission to reject a long-term energy supply agreement between Alcan and B.C. Hydro. That process will delay the Kitimat-area smelter project by about six months, Evans said, adding his company is still waiting for written reasons for the ruling.
Asked if utilities commission has put the Kitimat project in jeopardy, Evans replied: "Obviously, to some extent it does."
Evans said he's optimistic the problem can be worked out.
He also said costs have gone up for upgrading and expanding the Gove refinery in northern Australia - to US$2.3 billion - and delayed its startup date until the second quarter of this year, from the first quarter. The plant needed more worked than previously thought, which increased costs and affected its work schedule, and Australia's cyclone season also caused some delays, he added.
The delay is "quite typical of what has been happening with big projects in Australia," Evans said. "It's very much like northern Alberta - it's a very hot market."
But it's still a project we believe will deliver "double-digit returns" over the long haul, he said. The Australian refinery will supply China and countries in the Pacific region.
Looking ahead, he said "return on capital and cash generation remain our top priorities. We will continue to focus on development of our growth pipeline while maintaining a balanced approach to capital allocation."
For the full year, earnings soared to $1.79 billion or $4.75 a share from $129 million or 33 cents a share in the previous year.
Sales and operating revenues in the final quarter rose to $6.2 billion from $5.1 billion. For the full year, revenues increased to $23.6 billion from $20.3 billion in 2005.
Included in income for the fourth quarter was a primarily non-cash, after-tax gain of $97 million or 26 cents a share for the effects of foreign currency balance-sheet translation, compared with an after-tax loss of $5 million in the year-ago quarter.
Also included were after-tax charges of $85 million or 23 cents a share, including $36 million for restructuring initiatives across most business groups, asset impairment charges of $14 million principally for the Gove alumina refinery in Australia, an asset retirement obligation for closed sites of $11 million and a net loss of $8 million for business divestments.
Shares in Alcan were trading early We
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