World News

Profits at Alcoa, the global aluminium group, dropped by more than 50% in the first three months of 2008, compared with the same period last year, as a result of high energy costs and the weak US dollar.

Sales were at $7.4bn (£3.7bn), flat from the previous quarter, but up by 6% excluding the revenue of the packaging and consumer business, which was sold in February 2008 to New Zealand's Rank Group for $2.7bn in cash.

The sale included Closure Systems International, Alcoa's consumer products and flexible packaging divisions and Reynolds Food Packaging.

Alcoa retained its flat-rolled products division, which produces can sheet products serving the packaging market. This division achieved an after-tax operating income of $41m in the first quarter, up $56m from the previous quarter.

The firm said the segment benefited from improved performance in Russia, as well as slightly higher volumes and an improved mix of products offset by higher energy and alloy material costs.

Alcoa's net income from continuing operations to 31 March was $303m, compared with $624m in 2007.

Alcoa chairman and chief executive Alain Belda said: "Upstream margins were squeezed by higher energy costs and a weaker US dollar, but the global market remains tight and prices are near historic highs, primarily driven by demand in Asia, especially in China."

Belda said the firm was "well positioned to boost returns" when the North American and European economies "rebound".