Aluminum giant to buy back up to 5% of stock

Aluminum producer Alcan Inc. plans to buy back up to 5 per cent of its 376 million outstanding shares, citing expected solidity in its future cash flow. "We believe that a stock repurchase program represents an excellent investment for our shareholders," president and chief executive Dick Evans said. By buying back shares, Alcan would reduce its equity base, spreading profits over fewer shares and increasing its return on equity and earnings per share, two key ratios used to determine a company's financial health and investment rating.

 

Most share buybacks also lead to stock price increases as there are fewer shares on the market.