Boston, MA 08/26/2014 (wallstreetpr) – According to reports, Alcoa Inc (NYSE:AA) has decided to close its Portovesme smelter which is located on the Italian island of Sardinia. AA announced it in amidst of a lot of news about global mass production.
How will this decision impact AA:
Whenever any company decides to close any of its units, it directly impacts the production; same is the case with AA. The closure of Portovesme will bring down the total global smelting capacity of AA by 150,000 metric tons to 3.6 million metric tons per year. It will not only affect the financials of the company, but also, the global image of AA will be impacted by this decision.
The main reason that prompted Alcoa Inc (NYSE:AA) to close its Portovesme smelter is nothing but the operational inactivity of the plant. No operation has been done at this plant since November 2012. AA is a well-known aluminum company, and the step it has taken is just one more in the list. A lot of aluminum companies are closing their operations in different parts of the country due to high energy costs, low prices and less demand due to rising production in China. It has not only reduced the number of customers that the companies in Italy had, but also shortened the future prospects.
According to the management of Alcoa Inc (NYSE:AA), the company will have to bear after-tax restructuring charges somewhere between 14 cents to 15 cents a share or $170 million and $180 million in total. It will impact the financial results of AA in the 3Q 2014. The 60% of total charges levied on the company will not be in cash form.
The company has been taking steps from time to time to reduce the cost for past two years. In the month of July, it closed the operations of Point Henry smelter in Australia that was a 51-year-old venture. It reduced the total annual capacity by 190,000 tonnes.
