Arconic Inc. (Formerly Value-Add business units of Alcoa, Inc.) Business Report FY ended Dec. 2018

Financial Overview 

(in million USD)
  FY ended Dec. 31, 2018 FY ended Dec. 31, 2017 Rate of 
change (%)
Net Sales 14,014 12,960 8.1 1)
Net Income 642 (74) N/A -
Sales by Segments
Engineered Products and Solutions 6,316 5,943 6.3 2)
Global Rolled Products 5,604 5,000 12.1 3)
Transportation and Construction Solutions 2,126 2,011 5.7 4)

1) Net Sales
-The Company’s sales for the fiscal year ended December 31, 2018 increased by 8.1% from the previous year to USD 14,014 million. The increase in sales was caused by increased sales volume across all of the Company’s segments. Sales were further boosted by increased aluminum prices, favorable product mix, and favorable currency exchange effects. These gains were partially offset by decrease sales in the industrial gas turbine market and divestitures of specific businesses and facilities.

2) Engineered Products and Solutions sales
-In the fiscal year ended December 31, 2018, the Engineered Products and Solutions segment had sales of USD 6,316 million, an increase of 6.3% over the previous year. Factors for the increase include increased volumes in aerospace engine and defense end markets, combined with favorable foreign currency effects. Decreased sales volumes in the industrial gas turbine market and lowered aerospace prices in the fastener business partially offset these gains.

3) Global Rolled Products sales
-The Global Rolled Products segment had sales of USD 5,604 million in the fiscal year ended December 31, 2018, an increase of 12.1% from the previous year. Higher aluminum prices increased volumes in the automotive, commercial transportation and industrial end markets and favorable product mix were the primary contributors to the increase in sales. The divestiture of the Company’s rolling mill in Fusina, Italy and the ramp down of its North America packaging operations partially offset the increase in sales.

4) Transportation and Construction Solutions sales
-Sales in the Transportation and Construction Solutions segment increased by 5.7% to USD 2,126 million in the fiscal year ended December 31, 2018. The losses caused by the divestiture of the Latin America extrusions business was offset by increased sales volumes in the commercial transportation and building and construction end markets, favorable foreign currency exchange effects and higher aluminum prices.


-The Company has reached an agreement to sell its Texarkana, Texas rolling mill to Ta Chen International, a U.S. subsidiary of aluminum and stainless steel distributor Ta Chen Stainless Pipe. The Company will sell the mill for approximately USD 300 million in cash, plus additional contingent consideration of up to USD 50 million. The transaction is expected to close in the fourth quarter of 2018. (From a press release on October 1, 2018)

-Norsk Hydro announced the completion of Hydro’s acquisition of two Company extrusion plants in Brazil. The two extrusion plants in Utinga and Tubarao in southern Brazil have more than 600 total employees, one casthouse, seven extrusion presses ranging from 7 to 14 inches, and value-added capabilities. The transaction includes a cash payment from Hydro of USD 10 million, subject to working capital and other adjustments. The transaction is in line with Hydro’s strategy of selected growth within its Extruded Solutions business area and will strengthen Hydro’s downstream position in Brazil. (From a press release on April 2, 2018)


-The Company is supplying a new proprietary and highly formable aluminum to FCA US LLC to shed weight and boost performance of its 2018 Jeep Wrangler. The new lightweight, high-strength aluminum front and rear doors are 12 and 10.5 pounds lighter, respectively, compared to the previous models partly because they are made with the Company’s C6A1 alloy. Launched in late 2017, FCA US shed 200 pounds in total from the new Wrangler over its previous steel design. In addition to the proprietary alloy, Arconic also supplies aluminum sheet for the Wrangler's hood, inner windshield frame and various seal retainers and reinforcements. The same highly formable Arconic alloy is being used by FCA US in other popular vehicles to provide high-form, lightweight design solutions. (From a press release on June 27, 2018)

R&D Expenditure

(in million USD)
  FY ended Dec. 31, 2018 FY ended Dec. 31, 2017 FY ended Dec. 31, 2016
Total 103 109 130

-The Company’s decreased investment in research and development in the fiscal year ended December 31, 2018 was primarily as a result of decreased spending across the Company.

R&D Facilities

-In 2018, the Company installed a pilot Micromill line at its Arconic Technology Center (ATC). Micromill technology enables aluminum sheets to be produced in minutes rather than weeks and features enhanced structural properties. The Company also installed a pilot coating line at the ATC in the same year.

R&D Activities

-In 2018, the Company has focused on additive manufacturing, specifically metal powder materials that can be used across a range of additive process technologies. The Company is also producing and developing additively manufactured components through laser powder bed printing technology.

Capital Expenditure

(in million USD)
  FY ended Dec. 31, 2018 FY ended Dec. 31, 2017 FY ended Dec. 31, 2016
Total 768 596 1,125

-The Company is planning to invest approximately USD 700 million in capital expenditures in the fiscal year ending December 31, 2019.

Investments outside U.S.

-The Hungarian Investment Promotion Agency announced that the Company will construct another expansion in Hungary to double the capacities of its Szekesfehervar location. Szekesfehervar is the Company’s European center of the wheel product division, manufacturing half a million aluminium wheels annually. The Company will build a new manufacturing hall of 17,000 square meters and on a 53,000-square-meter plot in the Szekesfehervar industrial park for this purpose through an investment of EUR 107 million. Manufacturing is planned to begin at the end of 2019 with 200 new jobs. The project aims to double the production capacities of the Company, due to a growth in demand from European and global markets. Revenues from capacity expansion may exceed USD 100 million annually by 2023. (From HIPA press release on March 6, 2018)