Summary
Howmet Aerospace Inc. (formerly Alcoa Inc. at the time of this filing) announced on August 25, 2014, its decision to permanently shut down and demolish its Portovesme smelter in Italy. This facility, with a capacity of 150,000 metric tons per year, has been idle since November 2012 due to persistent uncompetitiveness, primarily driven by the lack of a viable long-term power solution. The company expects to record significant restructuring charges in the third quarter of 2014, estimated between $170 million and $180 million. These charges encompass asset impairments, inventory write-downs, environmental remediation, and additional employee severance costs. While the majority of the charges are non-cash, approximately $70-$75 million are expected to result in future cash outlays starting in 2015.
Key Highlights
- 1Permanent shutdown and demolition of the Portovesme smelter in Italy approved.
- 2Smelter has been idle since November 2012 due to uncompetitiveness and lack of power solution.
- 3Restructuring charges estimated between $170 million and $180 million to be recorded in Q3 2014.
- 4Charges include approximately $100 million for asset impairments and inventory write-downs.
- 5$40-$45 million allocated for asset retirement obligations and environmental remediation.
- 6$30-$35 million for additional employee severance benefits.
- 7Approximately $70-$75 million of the total charges will result in future cash outlays starting in 2015.