Pechiney: Annual Results 2002
PARIS--Jan. 30, 2003--Pechiney (PECH.PA) (PCHO) (SICOVAM:13290) announces a net loss of EUR 50 million in 2002, corresponding to adjusted net income (a) of EUR 211 million, or 2.69 euros per share, down 28% from the previous year. At EUR 407 million, earnings from operations declined 26% and were slightly higher than the estimate of EUR 400 million made last October. The net dividend proposed per common share "A" is unchanged at EUR 1.00.Major events in the year
-- | Good operating performance in a particularly difficult economic environment. The decline in the price of aluminum, of geographical premiums and in the parity of the U.S. dollar alone explain the decrease in the Group's earnings from operations. Thanks to its operating performance, the Group therefore succeeded in 2002 in offsetting the sharp drop in sales volume in aerospace and packaging, as well as the absence of a recovery in the United States. |
-- | Pechiney Continuous Improvement System. As of December 31, 2002, cumulated Continuous Improvement Gains are estimated at EUR 130 million, in line with the objective set at the end of 2001. |
-- | Successful integration of the acquisitions made in 2001: Eurofoil, Soplaril, Tomago. |
-- | Non-recurring charges of EUR315 million before taxes, mainly linked to assets depreciation and goodwill amortisation, calculated in accordance with the new US GAAP SFAS 142 and SFAS 144 (accounted for under Exceptional Goodwill Amortisation for EUR98m and under Restructuring expense, Other expense/income for the rest). |
-- | Cash Flow from Operations was higher in 2002, thanks to reduced working capital. |
-- | Acquisition of Corus' aluminum conversion assets. Preliminary agreement signed on October 23, 2002. |
-- | AP50 Project. Pechiney signed an energy supply agreement with Eskom (South Africa), achieving a major step forward in its first project to build an aluminum production facility using AP50 technology. |
-- | New corporate organization in three sectors: Primary Aluminum, Aluminum Conversion and Packaging. |
-- | Pechiney's divisions will continue to adapt in 2003. These have initiated several restructuring procedures in January, which may lead to a decision, in 2003, to close several production facilities. Should such decisions be made, they could translate, during this fiscal year, into estimated restructuring charges, which could range from EUR50 million to EUR70 million. |
2003 Outlook:
The year 2003 has begun in an environment marked by major political and economic uncertainty which affects all of our activities, with particular reference to the impact of the very unfavorable trend in the parity of the U.S. dollar and current market conditions. In Aluminum Conversion and Packaging, our sales should, nevertheless, benefit from the end of the destocking phase observed in 2002, with pressure on prices which will remain strong in certain segments. In such an environment, the Group's priority is to continue to achieve the benefits of the Pechiney Continuous Improvement System, in line with the objectives defined a year ago. These efforts will be complemented by the restructuring, and on some occasions the closing, of activities which are unable to demonstrate their viability. These measures, though difficult, are necessary to allow the Group to maintain its competitive position and continue to grow.
Statement of income (French GAAP) ------------------------------------------------------- Million of euros 2001 2002 ------------------------------------------------------- Net sales 11,054 11,909 Earnings from operations 549 407 Restructuring expense, other (expense) income (63) (243) Financial expense, net (68) (49) Income tax expense (130) (39) Equity affiliates 24 3 Minority interests (28) 0 Net Income before goodwill 284 79 Goodwill amortisation (29) (31) except. Goodwill amortisation (22) (98) Net income 233 (50) Net Income Per share "A" (EUR) 2.92 (0.66) ------------------------------------------------------- Adjusted Net Income(a) 297 211 Adj. Net inc. / share(a) bef. GW 4.12 3.11 Adj. net income per share(a) 3.76 2.69 ------------------------------------------------------- ------------------------------------------------------- Millions of euros Q4 2001 Q3 2002 Q4 2002 ------------------------------------------------------- Net sales 2,679 3,020 2,678 Earnings from operations 104 95 71 Restructuring expense, other (expense) income (35) (47) (126) Financial expense, net (16) (16) (11) Income tax expense (16) (19) 39 Equity affiliates 8 0 (1) Minority interests (6) (3) 3 Net Income before goodwill 39 10 (25) Goodwill amortisation (9) (8) (7) except. Goodwill amortisation (22) (16) (50) Net income 8 (14) (82) Net Income Per share "A" (EUR) 0.09 (0.18) (1.06) -------------------------------------------------------- Adjusted Net Income(a) 53 38 50 Adj. Net inc. / share(a) bef. GW 0.79 0.59 0.74 Adj. net income per share(a) 0.68 0.48 0.65 -------------------------------------------------------- (a) Published net income per share restated to reflect the impact, after taxes, of restructuring expense, other (expense) income and other non-recurring items.
Main trends in 2002
In 2002, the Group reported a net loss of EUR 50 million, or -0.66 euros per share, compared with net income of EUR 233 million (2.92 euros per share) in 2001. This result includes a significant amount of non-recurring expenses (in large part with no impact on the cash flow) primarily linked to restructuring, exceptional depreciation of assets and amortization of goodwill, calculated in accordance with the new US GAAP SFAS 142 and SFAS 144. At 2.69 euros, adjusted net income per share(1) was down 28% in 2002 from 3.76 euros in 2001.
In 2002, the Primary Aluminum sector (new organization) was affected by unfavorable market conditions (average realized aluminum price down 8.4% from 2001, fall in geographical premiums, negative trend in the parity of the U.S. dollar vis-a-vis the euro and fall in silicon prices), which had a negative impact of EUR 160 million at the earnings from operations level, which compares to a yearly decrease of EUR 142 million for the sector. Such impact from external factors could therefore only partially be compensated by the progress made otherwise by the sector. Several successes were reported in the sale of technology (winning all the large smelter expansion contracts on the market in 2002), production was increased through, in particular, the acquisition of its additional 15.5% equity interest in the Tomago facility in October 2001, and production costs for the sector were kept unchanged despite several technical incidents during 2002.
In Europe, the Aluminum Conversion sector demonstrated its ability to maintain earnings from operations in 2002 at the same level as in 2001, in spite of a significant decline in demand in markets linked to investment and a sharp drop in the aerospace sector. This performance was due to the capacity of the Issoire facility to adapt rapidly to the economic downturn, Continuous Improvement Gains that exceeded objectives, and strong operating performance as well as a favorable environment in markets related to consumer goods (can stock, automotive, foil and thin foil). In the United States, the product mix at the Ravenswood facility was adversely affected by the forecast decline in orders from Boeing, the impact of which was not offset by the upswing in shipments of standard rolled products. A major recovery program was launched at the plant in the fall.
The Packaging sector reported very good performance in terms of cost reduction through the systematic implementation of the Pechiney Continuous Improvement System. This advance was masked by a particularly difficult economic environment in 2002, due to persistent sluggishness in demand in most of its markets, especially for luxury products and cosmetics. Excluding the parity impact, earnings from operations for the sector were at the same level as in 2001, despite very difficult trading conditions.
Finally, earnings from operations in International Trade totaled a record EUR 73 million, representing an increase of 33%, as a result of active physical trading operations and, to a lesser extent, the consolidation of Pechiney Far East.
Continuous Improvement
The year 2002 saw the first benefits from the Pechiney Continuous Improvement System, with cumulated savings, gross of inflation, of EUR 130 million, in line with the objective announced at the beginning of the year.
2002 Cumulated Continuous Improvement Gains
The implementation of the Continuous Improvement System and team training produced their first results in terms of safety and the quality of customer service in all sectors. The financial savings exceeded objectives in Packaging and Aluminum Conversion, where the quality of the implementation of the Pechiney Continuous Improvement System confirmed its great potential. In the Primary Aluminum sector, the progress made was somewhat eroded by a number of production incidents.
Annual shareholders' meeting
Pechiney's Annual Shareholders' Meeting is scheduled for April 3, 2002. Both an ordinary and extraordinary Shareholders' Meeting are planned. A net dividend of EUR 1.00 per common share "A" and of EUR 1.65 per preferred share "B" has been proposed with payment on May 7, 2003, excluding the corresponding avoir fiscal (applicable French withholding tax).
French- and English-language versions of the proposed resolutions will be available at www.pechiney.com once an official announcement of the meeting has been published. Note should be made that as a result of a change in French regulation, participating shareholders are authorized, as was not the case in the past, to sell their shares at any time before the shareholders' meeting, regardless of their prior registration to this meeting.
Principal indicators ---------------------------------------------------- 2002 2001 ---------------------------------------------------- Average euro/U.S. dollar 0.94 0.90 Realised EUR/$ (Primary Al.) 0.93 0.89 LME average price ($/t) 1,365 1,454 Average realized price ($/t) 1,358 1,483 ---------------------------------------------------- ---------------------------------------------------- T4 T4 2002 2001 ---------------------------------------------------- Average euro/U.S. dollar 1.00 0.90 Realised EUR/$ (Primary Al.) 0.98 0.89 LME average price ($/t) 1,359 1,337 Average realized price ($/t) 1,334 1,373 ----------------------------------------------------
Recent developments - fourth quarter
The fourth quarter of 2002 was mainly marked by the announcement, in October, of a preliminary agreement for the acquisition of Corus' Aluminum Conversion assets. Pechiney hereby implements its strategy of profitable growth in key markets -- aerospace and automotive. The operation, which is subject to the approval of anti-trust authorities and to a favourable end to currently ongoing internal authorization procedures at Corus, will provide Pechiney with many synergies and should be earnings enhancing as of the first year.
In December 2002, Pechiney also announced a Group reorganization. The Group created an upstream sector -- Primary Aluminum -- which regroups activities in primary aluminum, bauxite-alumina, technology and smelter equipment sales, as well as the Ferroalloys division (PEM). This new sector will be under the responsibility of Jean-Dominique Senard. Aluminum Conversion, which will keep its current structure, will become a separate sector under the management of Pierre Vareille as of July 1, 2003. The Packaging sector, under Christel Bories, remains unchanged. Last but not least, the International Trade division, which cuts across division lines, will be managed separately, overseen by Olivier Mallet, the Group's Chief Financial Officer.
Net Sales (new organization) -------------------------------------------------------------- Millions of euros Q4 2001 Q3 2002 Q4 2002 -------------------------------------------------------------- Primary Aluminium 537 468 469 Aluminium Conversion 615 612 625 Packaging 622 559 554 ---------------------------- ---------------------------- Net sales from industrial 1,774 1,639 1,648 operations International Trade 905 1,381 1,030 -------------------------------------------------------------- Total 2,679 3,020 2,678 -------------------------------------------------------------- -------------------------------------------------------------- Millions of euros 2001 2002 -------------------------------------------------------------- ---------------------------- Primary Aluminium 2,209 1,913 Aluminium Conversion 2,676 2,618 Packaging 2,418 2,342 ------------------- ------------------- Net sales from industrial 7,303 6,873 operations International Trade 3,751 5,036 -------------------------------------------------------------- Total 11,054 11,909 -------------------------------------------------------------- Earnings from operations (new organization) -------------------------------------------------------------- Millions of euros Q4 2001 Q3 2002 Q4 2002 -------------------------------------------------------------- Primary Aluminium 79 70 50 Aluminium Conversion (10) 0 0 Packaging 35 32 24 International Trade 24 16 20 Holdings (24) (23) (23) -------------------------------------------------------------- Total 104 95 71 -------------------------------------------------------------- -------------------------------------------------------------- Millions d'euros 2001 2002 -------------------------------------------------------------- Primary Aluminium 424 282 Aluminium Conversion 22 13 Packaging 136 129 International Trade 55 73 Holdings (88) (90) -------------------------------------------------------------- Total 549 407 --------------------------------------------------------------
Segment breakdown - fourth quarter
Consolidated net sales in the fourth quarter were stable at EUR 2,678 million. On a comparable basis, there was a decrease of 9%. This difference was mainly due to the consolidation of Pechiney Far East, an International Trade subsidiary.
Earnings from operations - fourth quarter
At EUR 71 million, earnings from operations in the fourth quarter decreased by 32% from the same period in 2001 and by 25% from the previous quarter.
In comparison with the first nine months of the year, the fourth quarter was marked by the following trends.
There was an amplification of the negative impact of the rise in the parity of the euro vis-a-vis the U.S. dollar on operating results in the Primary Aluminum sector, while the negative effect of the decline in the price of aluminum, which had begun in the third quarter of 2001, was attenuated.
In Aluminum Conversion there was a slight upswing in shipments to the aerospace market in Europe.
In Packaging, a decrease in sales volume was confirmed in plastic packaging with no clear signs of a recovery in beauty and cosmetics markets.
Primary Aluminum (Aluminum Metal, Bauxite - Alumina and
Ferroalloys)
At EUR 50 million, earnings from operations in the fourth quarter of 2002 decreased by 29% from the same period in 2001. Compared to the fourth quarter of 2001, the negative impact from external factors (decline in the parity of the U.S. dollar, aluminium price, geographical premiums, silicon prices) amounted to -EUR 39 million.
Strong growth in the volume of technology sales (second potline at Mozal and third potline at Hillside) made it possible to offset some of the effects of the difficult economic environment. In addition, except for the PNL plant which has experienced production difficulties due to exceptional weather conditions, all of the Group's aluminum plants posted a satisfactory level of production in the fourth quarter.
In comparison with the third quarter of 2002, earnings from operations were down 29%, mainly owing to the major decrease in the parity of the U.S. dollar during the period.
In 2003, while the price of aluminum seems relatively stable, the recent decline in the parity of the U.S. dollar, vis-a-vis the currencies of most of the countries that produce primary aluminum, is likely, if the situation lasts, to have a strong negative impact on results in this sector.
Aluminum Conversion
In Aluminum Conversion, earnings from operations in the fourth quarter of 2002 increased by EUR 10 million over the same period in 2001, and were stable compared with the previous quarter.
Earnings from operations reported by European activities rose from EUR 2 million in the fourth quarter of 2001 to EUR 15 million in the same period in 2002. In the third quarter of 2002, earnings from operations totaled EUR 12 million.
The increase was mainly due to:
-- | the good performance in terms of production costs at all European activities, through the implementation of the Pechiney Continuous Improvement System; |
-- | the resilience demonstrated by the Issoire plant, which, in a depressed aerospace market, adapted its manufacturing base and production capacity, thereby maintaining its operating result at the level reported in the fourth quarter of 2001; |
-- | the increase in sales volume in the markets for automotive, heat exchangers and foil and thin foil, with in the last category a major improvement in productivity at the Rugles plant. |
In the United States, the net operating loss reported by the Ravenswood plant went from EUR 12 million in the fourth quarter of 2001 to EUR 15 million in the same period in 2002. In the third quarter of 2002, the net operating loss stood at EUR 12 million. This trend was due to the accounting in the fourth quarter of non-recurring expenses, in particular linked to impairment of inventories. A major plan targeting industrial and commercial recovery was launched in September 2002. It was followed in December by an agreement with the local union to re-negotiate the current labor contract for two years until mid-2005.
In 2003, the sector is expected to improve its performance significantly. In Europe, it will benefit from an upturn in aerospace shipments as can be seen from orders booked at the end of 2002. In the United States, the profitability of the Ravenswood plant should improve, without, however, breaking-even in 2003 under current market conditions.
Packaging
In Packaging, earnings from operations totaled EUR 24 million in the fourth quarter of 2002, compared with EUR 35 million in the same period in 2001, and EUR 129 million in 2002 versus EUR 136 million in 2001, down 5%.
The different activities in the Packaging sector reported very contrasting results in 2002.
Despite the negative impact of reduced sales volume, the Plastic Packaging division reported a 36% increase in earnings from operations in 2002. This performance was mainly linked to the successful, systematic implementation of the Pechiney Continuous Improvement System, to the successful integration of Soplaril and to a positive scissors effect between selling prices and raw materials costs in the first half of 2002. In the fourth quarter, the decline in sales volume tended to gain ground in this market, which came on top of a rise in resin prices.
The divisions serving cosmetics -- Cebal -- and luxury goods -- Techpack International -- were affected by a sharp drop in sales volume (especially in luxury markets), which was partly due to strong destocking by clients and led to a decline in selling prices during the second half. These factors could not be fully offset by the good performances achieved through Pechiney's Continuous Improvement System. Earnings from operations in these activities therefore decreased significantly in 2002.
In the fourth quarter, in the beauty-cosmetics segment, the sector maintained sales volume at a level comparable with the already weak volumes reported in the same period in 2001.
In 2003, while awaiting market recovery and in an economic environment which remains difficult at the beginning of the year, the Packaging sector should continue to benefit from the positive impact on earnings from operations of the Pechiney Continuous Improvement System and the restructuring measures under way at Techpack International.
International Trade
The year 2002 was particularly satisfactory for this division, which reported a 33% rise in earnings from operations to EUR 73 million.
This performance was due to strong growth in results in all physical trading segments, and, to a lesser extent, to the results of Pechiney Far East (consolidated in January 2002), which considerably offset the lackluster economic environment in which the network of distribution and sales agencies operated.
Other statement of income items
Net financial expense totaled EUR 11 million in the fourth quarter and EUR 49 million for the whole year, down EUR 19 million from 2001. This reduction of financial expense mainly reflected a sharp decline in interest rates in the United States and Europe.
Current and deferred income taxes in the period represented a tax asset of EUR 39 million, compared with a liability of EUR 16 million in 2001. In 2002, the effective tax rate was 34%, significantly less than the Group's forecasts.
Finally, in the fourth quarter, the Group recorded EUR 126 million in restructuring charges, other exceptional depreciation of fixed assets and investments and other (expense) income, of which EUR 114 million represented non-recurring charges and EUR 50 million exceptional amortization of goodwill.
The majority of these non-recurring expenses concerned cosmetics and luxury packaging, and represented depreciation of fixed assets and restructuring at Cebal and Techpack International (TPI), as well as additional exceptional amortization of goodwill at TPI in the amount of EUR 43 million. The other non-recurring items concerned the Aluminum Conversion sector (mainly Ravenswood) and the Primary Aluminum sector. At all of the manufacturing facilities in which the absence of adequate prospects of profitability led to exceptional depreciation of fixed assets, the Group announced the launch of labor consultation procedures related to proposed recovery plans.
Amortization of goodwill
In addition to the exceptional amortization of goodwill described above, in the amount of EUR 50 million, the Group continues to amortize its goodwill regularly according to French accounting principles. A recurring expense of EUR 7 million was, therefore, recorded in the fourth quarter of 2002, bringing the total recurring expense for 2002 to EUR 31 million.
Cash Flow
Cash flow from operations was higher in 2002 than in 2001 thanks to improved working capital requirement.
Balance sheet items
As of December 31, 2002, net indebtedness totaled EUR 1,437 million. Compared with shareholders' equity and minority interests of EUR 3,163 million, the debt-to-equity ratio was 0.45, compared with 0.42 as of December 31, 2001.
As of December 31, 2002, the total number of outstanding shares was 82,513,683, of which 4,716,938 were owned by the Company (treasury stock). In the fourth quarter, 382,700 shares were bought by Pechiney, bringing the total number of shares bought in 2002 to 1,162,274.
--------------------------------------------------------------------- Calendar --------------------------------------------------------------------- Shareholders' Meeting 2002: April 3, 2003 -------------------------- Next consensus survey: March 24, 2003 --------------------- First quarter results: April 29, 2003 --------------------- Payment of dividend: May 7, 2003 ------------------- Pechiney Investor Day (London): June 17, 2003 ---------------------------------------------------------------------
Certain statements in this press release that describe Pechiney's intentions, expectations or projections may constitute forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Pechiney's actual results, performance or achievement to be materially different from its intentions, expectations or projections. The forward-looking statements in this press release speak only as of its date and Pechiney undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Appendix Comparison with American accounting standards (US GAAP) Statement of Income Q4 2002 Millions of euros French FAS 133 FAS 142 US GAAP GAAP Impact Impact ------------------------------------------ --------- --------- ------- Net Sales 2,678 1 - 2,679 ------------------------------------------ --------- --------- ------- Earnings from operations 71 5 - 76 ------------------------------------------ --------- --------- ------- Restructuring expense, other (expense) income (126) - - (126) --------- --------- --------- ------- Income from operations (55) 5 - (50) Financial expense, net (11) (3) - (14) Income tax benefit (expense) 39 - - 39 Equity in net earnings of affiliates (1) 2 - 1 Minority interests 3 - - 3 Goodwill amortisation (7) - 7 0 Exceptional Goodwill amortisation (50) - (10) (60) ------------------------------------------ --------- --------- ------- Net Income (82) 4 (3) (81) ------------------------------------------ --------- --------- ------- Statement of Income FY 2002 Millions of euros French FAS 133 FAS 142 US GAAP GAAP Impact Impact ------------------------------------------ --------- --------- ------- Net Sales 11,909 9 - 11,918 ------------------------------------------ --------- --------- ------- Earnings from operations 407 16 - 423 ------------------------------------------ --------- --------- ------- Restructuring expense, other (expense) income (243) - - (243) --------- --------- --------- ------- Income from operations 164 16 - 180 Financial expense, net (49) (1) - (50) Income tax benefit (expense) (39) (5) - (44) Equity in net earnings of affiliates 3 15 - 18 Minority interests 0 - - 0 Goodwill amortisation (31) - 31 0 Exceptional Goodwill amortisation (98) - 21 (77) Effect of change in accounting principle - - (31) (31) ------------------------------------------ --------- --------- ------- Net Income (50) 25 21 (4) ------------------------------------------ --------- --------- ------- Balance Sheet as of 31/12/2002 Millions of euros French US GAAP US GAAP GAAP Impact ---------------------------------------------------- --------- ------- Long-term assets 4,840 (62) 4,778 Current assets 3,394 202 3,596 --------- --------- ------- Total assets 8,234 140 8,374 Shareholder's equity 3,014 (105) 2,909 Minority Interests 149 - 149 Long-term liabilities 2,802 45 2,847 Current liabilities 2,269 200 2,469 --------- --------- ------- Total liabilities and Shareholder's equity 8,234 140 8,374 ---------------------------------------------------- --------- -------
The accounting principles applied by the Group in the preparation of its financial statements differ in certain points from generally accepted accounting principles in the United States. The impact of these differences is presented in the accompanying tables and explained below.
Accounting for derivatives and hedging operations
Pechiney's financial statements prepared in accordance with US GAAP comply with SFAS 133, which requires that derivative instruments (foreign exchange, interest rates, commodities) be recognised as assets or liabilities and measured at fair value. This standard also sets the criteria for hedge accounting.
The application of these criteria means that certain hedging activities, which are efficient from an economic point of view, are no longer recognised as hedging activities. As a result, gains and losses resulting from the mark to market of certain hedging instruments are to be recorded in net income or in equity, with no recognition of the inverse effect of the mark to market of the hedged items.
For this reason, the impact of this standard on results varies according to market conditions and is difficult to forecast. The application of SFAS 133 generated a net accounting gain (with no impact on cash flow) of EUR 4 million in the fourth quarter of 2002 and of EUR 25 million for the year 2002.
Amortisation of goodwill
Pechiney's financial statements prepared in accordance with US GAAP comply with SFAS 142, which requires that goodwill be no longer amortised, but be regularly tested for impairment.
The application of SFAS 142 led to the cancellation of the recurring amortization charge recorded in the French GAAP financial statements. Impairment tests resulted in the recording of goodwill write-downs amounting to EUR 31 million recorded as effect of changes in accounting principles at January 1, 2002 and relating to the year 2002. These write-downs are also recorded in the French GAAP financial statements, but for lower amounts, due to the recording of recurring goodwill amortization under French GAAP.
Differences in the balance sheet included the impact of SFAS 133 and SFAS 142 (respectively increase in shareholders' equity of EUR 15 millions and EUR 21 million) and a EUR 141 million reduction in shareholders' equity due to the different way additional pension liabilities are recorded.
Appendix PECHINEY Consolidated Statement of Income French GAAP ---------------------------------------------------------- ----------- (in millions of euros) 2002 2001 ---------------------------------------------------------- ----------- Net sales 11,909 11,054 Other operating revenues 144 150 Cost of goods sold (excluding depreciation) (10,611) (9,615) Selling, general and administrative expense (610) (615) Research and development expense (90) (97) Amortisation (excluding goodwill) (335) (328) -------------- ----------- Earnings from operations 407 549 Restructuring expense and Long-lived assets writedowns (145) (75) Other (expense) income (98) 12 Income from operations 164 486 -------------- ----------- Financial expense, net (49) (68) Income before income taxes 115 418 -------------- ----------- Income tax benefit (expense) (39) (130) Income from consolidated companies 76 288 -------------- ----------- Equity in net earnings of affiliates 3 24 Minority interests 0 (28) Net Income before goodwill 79 284 -------------- ----------- Goodwill amortisation (31) (29) Exceptional Goodwill amortisation (98) (22) ---------------------------------------------------------- ----------- Net Income (50) 233 ---------------------------------------------------------- ----------- Net Income per share "A" (EUR) (0,66) 2,92 ---------------------------------------------------------- ----------- (a) Computed on the average number of "A" and "B" shares, i.e. 78,520,814 for the year 2002 (excluding treasury shares). 1,162,274 were repurchased during 2002. Adjusted Net Income per share Calculation ---------------------------------------------------------------------- - Adjusted net Income(b) 211 297 - Adjusted net Income per share (EUR) 2,69 3,76 ---------------------------------------------------------- ----------- (b) Published net income per share restated to reflect the impact, after taxes, of restructuring expense, other (expense) income and other non recurring items. Consolidated Statement of Cash Flow ---------------------------------------------------------- ----------- (in millions of euros) 2002 2001 ---------------------------------------------------------- ----------- Resources from Operations 740 750 Change in working capital requirements 168 24 Utilisation of provisions and other (279) (197) ------------- ----------- Cash provided by Operations 629 577 Capital expenditures (479) (389) Financial investments (63) (582) Divestitures and other 5 54 ------------- ----------- Net Cash-flow 92 (340) Dividends paid (122) (134) Purchase of treasury shares (40) (60) Increase in capital 36(c) 1 ---------------------------------------------------------- ----------- Increase (decrease) in Cash (34) (533) ---------------------------------------------------------- ----------- (c) Including EUR 35 million linked to the increase in capital reserved to employees in January 2002. Appendix PECHINEY Consolidated Statement of Income(d) French GAAP ---------------------------------------------------------------------- 2001 ---------------------------------------------------------------------- (in millions of euros) Q1 Q2 Q3 Q4 ---------------------------------------------- ------- ------- ------- Net sales 2,817 2,806 2,752 2,679 Other operating revenues 43 38 29 40 Cost of goods sold (excluding depreciation) (2,443) (2,448) (2,393) (2,331) Selling, general and administrative expense (147) (150) (146) (172) Research and development expense (24) (22) (24) (27) Amortisation (excluding goodwill) (80) (82) (81) (85) -------- ------- ------- ------- Earnings from operations 166 142 137 104 Restructuring expense and Long-lived assets writedowns 0 (7) (57) (11) Other (expense) income 8 (14) 42 (24) -------- ------- ------- ------- Income from operations 174 121 122 69 Financial expense, net (16) (17) (19) (16) -------- ------- ------- ------- Income before income taxes 158 104 103 53 Income tax benefit (expense) (48) (27) (39) (16) Income from consolidated companies 110 77 64 37 Equity in net earnings of affiliates 1 10 5 8 Minority interests (9) (7) (6) (6) Net Income before goodwill 102 80 63 39 Goodwill amortisation (6) (7) (7) (9) Exceptional Goodwill amortisation - - - (22) Net Income 96 73 56 8 ---------------------------------------------- ------- ------- ------- (d) Amortization of goodwill, previously recorded in operating income, is now presented before net income. The 2001 quarterly accounts were therefore restated. Adjusted Net Income per share Calculation ---------------------------------------------------------------------- - Adjusted net Income(e) 91 87 66 53 - Adjusted net Income per share (EUR) 1.15 1.09 0.84 0.68 ---------------------------------------------- ------- ------- ------- (e) Published net income per share restated to reflect the impact, after taxes, of restructuring expense, other (expense) income and other non recurring items. Earnings from operations (new organization) ---------------------------------------------------------------------- 2001 ---------------------------------------------------------------------- Q1 Q2 Q3 Q4 ---------------------------------------------- ------- ------- ------- Primary Aluminium 137 95 113 79 Aluminium Conversion 9 20 3 (10) Packaging 32 37 32 35 International Trade 10 11 10 24 Holdings (22) (21) (21) (24) -------- ------- ------- ------- Total 166 142 137 104 Total EBITDA (f) 246 224 218 189 ---------------------------------------------- ------- ------- ------- Consolidated primary Aluminium Prod. (kt) 197 200 202 221 Average realised LME price ($/t)(g) 1,550 1,543 1,481 1,373 Realised EUR /$ - Primary Aluminium 0.90 0.90 0.88 0.89 ---------------------------------------------- ------- ------- ------- Average euro/U.S. dollar 0.92 0.87 0.89 0.90 ---------------------------------------------- ------- ------- ------- (f) Earnings from operations before depreciation. (g) Average actual selling price of a metric ton of primary aluminium (excluding premiums) negotiated by the Group during the period. ---------------------------------------------------------------------- 2002 ---------------------------------------------------------------------- (in millions of euros) Q1 Q2 Q3 Q4 ---------------------------------------------- ------- ------- ------- Net sales 2,814 3,397 3,020 2,678 Other operating revenues 30 41 35 38 Cost of goods sold (excluding depreciation) (2,473) (3,042) (2,717) (2,379) Selling, general and administrative expense (153) (152) (142) (163) Research and development expense (24) (20) (22) (24) Amortisation (excluding goodwill) (90) (87) (79) (79) -------- ------- ------- ------- Earnings from operations 104 137 95 71 Restructuring expense and Long-lived assets writedowns (10) (43) (7) (85) Other (expense) income (6) (11) (40) (41) -------- ------- ------- ------- Income from operations 88 83 48 (55) Financial expense, net (11) (11) (16) (11) -------- ------- ------- ------- Income before income taxes 77 72 32 (66) Income tax benefit (expense) (28) (31) (19) 39 Income from consolidated companies 49 41 13 (27) Equity in net earnings of affiliates 1 3 0 (1) Minority interests (4) 4 (3) 3 Net Income before goodwill 46 48 10 (25) Goodwill amortisation (9) (8) (8) (7) Exceptional Goodwill amortisation - (31) (16) (50) Net Income 37 9 (14) (82) ---------------------------------------------- ------- ------- ------- (d) Amortization of goodwill, previously recorded in operating income, is now presented before net income. The 2001 quarterly accounts were therefore restated. Adjusted Net Income per share Calculation ---------------------------------------------------------------------- - Adjusted net Income(e) 49 74 38 50 - Adjusted net Income per share (EUR) 0.62 0.94 0.48 0.65 ---------------------------------------------- ------- --------------- (e) Published net income per share restated to reflect the impact, after taxes, of restructuring expense, other (expense) income and other non recurring items. Earnings from operations (new organization) ---------------------------------------------------------------------- 2002 ---------------------------------------------------------------------- Q1 Q2 Q3 Q4 ---------------------------------------------- ------- --------------- Primary Aluminium 69 93 70 50 Aluminium Conversion 4 9 0 0 Packaging 33 40 32 24 International Trade 19 18 16 20 Holdings (21) (23) (23) (23) -------- ------- -------- ------ Total 104 137 95 71 Total EBITDA (f) 194 224 174 150 ---------------------------------------------- ------- -------- ------ Consolidated primary Aluminium Prod. (kt) 215 219 221 222 Average realised LME price ($/t)(g) 1,354 1,385 1,360 1,334 Realised EUR /$ - Primary Aluminium 0.88 0.90 0.95 0.98 ---------------------------------------------- ------- -------- ------ Average euro/U.S. dollar 0.88 0.92 0.98 1.00 ---------------------------------------------- ------- -------- ------ (f) Earnings from operations before depreciation. (g) Average actual selling price of a metric ton of primary aluminium (excluding premiums) negotiated by the Group during the period. Appendix Consolidated Balance Sheet French GAAP As of As of (in millions of euros) 31/12/2002 31/12/2001 ---------------------------------------------------------------------- ASSETS Long-term assets Property, plant and equipment, net 2,832 2,997 Goodwill, net 637 860 Other intangible assets, net 163 145 Investments in equity affiliates 285 297 Long-term investments 139 141 Deferred income taxes 505 335 Other long-term assets 279 256 ------------------------- 4,840 5,031 Current assets Inventories, net 1,525 1,601 Accounts receivable - Trade 1,281 1,466 Deferred income taxes 51 60 Prepaid expenses 72 71 Other receivables 29 20 Marketable securities 153 113 Cash 283 321 ------------------------- 3,394 3,652 ---------------------------------------------------------------------- Total assets 8,234 8,683 ---------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Shareholder's equity Capital stock - Common shares "A" 1,242 1,229 - Preferred shares "B" 16 16 Treasury shares (180) (140) Share premium 790 767 Retained earnings 1,297 1,473 Cumulative translation adjustement (151) 50 3,014 3,395 Minority interests 149 169 Long-term liabilities Deferred income taxes 195 173 Other long-term liabilities 1,142 1,129 ------------------------- 1,337 1,302 Long-term debt 1,465 971 Current liabilities Accounts payable - Trade 1,456 1,504 Accrued liabilities 376 375 Other payables 8 18 Current portion of long-term debt 39 37 Short-term bank loans 390 912 ------------------------- 2,269 2,846 ---------------------------------------------------------------------- Total liabilities and shareholders' equity 8,234 8,683 ---------------------------------------------------------------------- Net Debt 1,437 1,484 Shareholder's equity + Minority interests 3,163 3,564 Gearing 0,45 0,42 ---------------------------------------------------------------------- Appendix PECHINEY Consolidated Statement of Income US GAAP ---------------------------------------------------------------------- (in millions of euros) 2002 2001 ---------------------------------------------------------------------- Net sales 11,918 11,043 Other operating revenues 145 150 Cost of goods sold (excluding depreciation) (10,605) (9,649) Selling, general and administrative expense (610) (616) Research and development expense (90) (97) Amortisation (excluding goodwill) (335) (328) ------------------------- Earnings from operations 423 503 Restructuring expense and Long-lived assets writedown (145) (75) Other (expense) income (98) 12 ------------------------- Income from operations 180 440 Financial expense, net (50) (70) ------------------------- Income before income taxes 130 370 Income tax benefit (expense) (44) (113) ------------------------- Income from consolidated companies 86 257 Equity in net earnings of affiliates 18 24 Minority interests 0 (28) ------------------------- Net Income before goodwill and effect of change in accounting principle 104 253 Goodwill amortisation - (26) Exceptional Goodwill amortisation (77) (22) Net Income before effect of change in accounting principle 27 205 Effect of change in accounting principle (31) (11) ------------------------- Net Income (4) 194 ---------------------------------------------------------------------- Net Income per share "A" (EUR) (0.07) 2.43 ---------------------------------------------------------------------- (h) Computed on the average number of "A" and "B" shares, i.e. 78,520,814 for the year 2002 (excluding treasury shares). Adjusted Net Income per share Calculation ---------------------------------------------------------------------- - Adjusted net Income(i) 268 258 - Adjusted net Income per share (EUR) 3.42 3.26 ---------------------------------------------------------------------- (i) Published net income per share restated to reflect the impact, after taxes, of restructuring expense, other (expense) income and other non recurring items. Consolidated Statement of Cash Flow ---------------------------------------------------------------------- (in millions of euros) 2002 2001 ---------------------------------------------------------------------- Resources from Operations 755 704 Change in working capital requirements 154 46 Utilisation of provisions and other (280) (173) ------------------------- Cash provided by Operations 629 577 Capital expenditures (479) (389) Financial investments (63) (582) Divestitures and other 5 54 ------------------------- Net Cash-flow 92 (340) Dividends paid (122) (134) Purchase of treasury shares (40) (60) Increase in capital 36(j) 1 ---------------------------------------------------------------------- Increase (decrease) in Cash (34) (533) ---------------------------------------------------------------------- (j) Including EUR 35 million linked to the increase in capital reserved to employees in January 2002. Appendix Consolidated Balance Sheet US GAAP As of As of (in millions of euros) 31/12/2002 31/12/2001 ---------------------------------------------------------------------- ASSETS Current assets Cash 283 321 Marketable securities 153 113 Other receivables 11 20 Prepaid expenses 309 205 Deferred income taxes 47 69 Accounts receivable - Trade 1,269 1,444 Inventories, net 1,524 1,601 ------------------------- 3,596 3,773 Long-term assets Other long-term assets 201 206 Deferred income taxes 499 339 Long-term investments 139 141 Investments in equity affiliates 285 280 Other intangible assets, net 163 145 Goodwill, net 659 864 Property, plant and equipment, net 2,832 2,997 ------------------------- 4,778 4,972 ---------------------------------------------------------------------- Total assets 8,374 8,745 ---------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Short term debt Short term bank loans 392 912 Current portion of long term debt 39 37 Other payables 8 15 Accrued liabilities 579 516 Accounts payable - Trade 1,451 1,505 ------------------------- 2,469 2,985 Other long term liabilities 45 81 Long term Debt 1,465 971 Long term Liabilities Other long term liabilities 1,142 1,129 Deferred income taxes 195 173 ------------------------- 1,337 1,302 Minority Interests 149 169 Shareholder's equity Fair value of derivative instruments 33 2 Cumulative translation adjustment (151) 54 Additional minimum pension liability (141) (121) Retained earnings 1,300 1,430 Share premium 790 767 Treasury shares (180) (140) Capital stock 1,258 1,245 - Common shares "A" 1,242 1,229 - Preferred shares "B" 16 16 ------------------------- 2,909 3,237 ---------------------------------------------------------------------- Total liabilities and shareholders' equity 8,374 8,745 ----------------------------------------------------------------------