NEWTOWN, Conn. -- Arconic is having a rough time following its spin-off from Alcoa. But maybe, just maybe things may be getting better as the company posts profits for the first time since its inception.
For 2018, Arconic's revenues were almost $14 billion, up 8 percent from sales of $13 billion in 2017. The company net income of $642 million compared to a loss of $74 million for 2017. The loss in 2017 was primarily attributed to $879 million in special items, principally due to impairments of goodwill in the forgings and extrusions business, as well as assets in the Latin America extrusions business and the impact of U.S. tax reform.
Prior to the split, Alcoa had been building up its aerospace business via acquisitions in an effort to capture a greater share of this booming market. Traditionally, the company had focused on its upstream businesses, primarily aluminum and alumina. However, with a glut in aluminum markets brought on by increased Chinese exports, the company decided to break its operations into two publicly traded companies. Alcoa's traditional business, which also includes better-performing bauxite and alumina, retains the Alcoa name. Arconic now controls the rest of its business.
As Boeing and Airbus continued to work off their record backlogs, the commercial aircraft sector gained long-term strength. This has translated into sustained demand across the spectrum of components used in airline manufacturing. Seeking to capture a larger share of this market, Alcoa acquired global titanium leader RTI International Metals, aerospace components manufacturer TITAL, and global jet engine parts manufacturer Firth Rixson.
Along with these purchases, the company has been expanding its aerospace facilities and existing operations within the United States. As part of these efforts, the company opened the world's largest aluminum-lithium facility in Lafayette, Indiana; increased jet engine parts production in La Porte, Indiana, and Hampton, Virginia; and added advanced aerospace plate-manufacturing capabilities in Davenport, Iowa. The company also doubled the coatings capabilities at its jet engine components facility in Whitehall, Michigan.
All told, Arconic derives over 40 percent of its revenue from the aerospace and gas turbine markets. The balance of the new firm's interest will be in the automotive, commercial transportation, and construction industries.
However, the company has not had an easy time of it, posting almost $1 billion in losses since its inception. In late 2017, the company appointed a new CEO, former GE manager Chip Blankenship, to led the firm. His tenure was cut short in early 2019, when John Plant was named to CEO position - marking the fourth person to occupy that office since 2017. The management change followed the collapse of $15 billion deal to sell the company Apollo and Elliott Management. Disputes over pension obligations and liabilities associated with the building unit's flammable cladding panels, which were involved in the deadly 2017 Grenfell Tower fire in London, were key stumbling blocks according to news reports.
The new management team moved quickly and in February 2019 initiated a restructuring focusing the firm on two segment: Engineered Products & Forgings, which produces aircraft and gas turbine components and Global Rolled Products, which manufactures sheet and plate products. The sale of the building unit operations remains priority on the list and one of the two remaining operations are likely headed to the auction block as Arconic seeks to right its operations.