Asia PR News

MONTREAL, Jan. 27 /CNW-AsiaNet/ –

- Net after-tax charge of approximately $1.40 - $1.50 per share
expected mainly for restructuring, closures and impairments
- Operating earnings per share, which are unaffected by this
charge, expected to be consistent with those reported in the
third quarter of 2005

Alcan Inc. (NYSE, TSX: AL) today identified charges related to the
previously announced restructuring of its packaging business, the write down of
associated goodwill, asset impairments, and the previously announced closure of
two smelters in Europe. The Company’s results for the fourth quarter of 2005
are expected to include Other Specified Items (OSIs)(x) amounting to a net
after-tax charge of approximately $510 - $560 million, or $1.40 - $1.50 per
common share.

Excluding the effects of OSIs and balance sheet translation effects, Alcan
expects its operating earnings for the fourth quarter to be up strongly from
the same period a year ago and consistent with those reported in the third
quarter of 2005. This estimate includes anticipated mark-to-market losses on
derivatives of approximately 10 cents per share, compared with losses of 4
cents per share included in third-quarter earnings. Results for the fourth
quarter will be announced on February 7, 2006 and followed by a conference call.

"These charges are driven by the impact of significant external cost
increases and competitive pressures on some of our businesses in 2005," said
Travis Engen, President and Chief Executive Officer, Alcan Inc. "We have made
significant strides in dealing with the challenges of the past year as
evidenced by the strong underlying operating performance of our business," he
added.

"While keeping our business competitive is an ongoing process, the Pechiney
integration activities are now complete. The steps we are summarizing today
will put our businesses on a stronger, more sustainable competitive footing and
contribute towards achieving the individual business group targets we laid out
last September," Engen said.

Included in expected OSIs for the fourth quarter are the following:

- As part of the continuing drive to reshape its portfolio, counter
increasing competitive pressures in Western countries and improve
margins, the Packaging group is pursuing plans to restructure certain
businesses, notably global Beauty Packaging and Food Flexible
Packaging Europe. The group is pursuing its strategy of establishing a
network of centers of excellence focused on customers in key
geographic and end markets while increasing the share of its capacity
in emerging markets. This will result in a system comprised of fewer,
larger, more specialized plants, better able to serve existing and
future customers and intended to move the group toward its stated
objective of achieving a 15% margin by 2009. An after-tax charge of
approximately $295 million is expected to be taken to reflect the
ongoing implementation of this strategy.

- As required under Generally Accepted Accounting Principles, the
company annually tests for goodwill impairment in the fourth quarter.
Due to an increasingly competitive environment for the global Beauty
Packaging business, reflecting weaker local market conditions,
increased foreign competition, rising input costs and the evolution
of exchange rates, the company has concluded that part of the goodwill
associated with this business should be written down. As a result,
the company is expected to record a non-cash impairment charge of
approximately $130 million in the fourth quarter.

- In response to escalating energy costs in Europe, the company is
proceeding with the previously announced closures of its Lannemezan
smelter in France and its Steg smelter in Switzerland. These steps
will advance Alcan toward its stated objective of having 55 per cent
of its primary metal production in the first quartile of the global
cost curve and 80 per cent in the lowest two quartiles by 2009. On a
combined basis, the smelters have an annual production capacity of
94 thousand tonnes or about 3 per cent of Alcan’s total capacity.
The closure of these facilities is expected to result in an after-tax
charge of approximately $85 million.

- Continued rationalization in the Engineered Products Group, including
the previously announced closure of the company’s Vernon, California
cast plate business, is expected to result in an after-tax charge of
about $35 million.

Of the total expected net charge for OSIs in the fourth quarter,
approximately 80% is for non-cash impairments, with the remainder for
severance, site remediation and other restructuring costs.

Alcan is a multinational, market-driven company and a global leader in
aluminum and packaging. With world-class operations in primary aluminum,
fabricated aluminum as well as flexible and specialty packaging, aerospace
applications, bauxite mining and alumina processing, today’s Alcan is well
positioned to meet and exceed its customers’ needs for innovative solutions and
service. Alcan employs almost 70,000 people and has operating facilities in 55
countries and regions.

(x) Other Specified Items (OSIs) include, for example: restructuring and
synergy charges; asset impairment charges; gains and losses on
non-routine sales of assets, businesses or investments; unusual gains
and losses from legal claims and environmental matters; gains and
losses on the redemption of debt; income tax reassessments related to
prior years and the effects of changes in income tax rates; and other
items that, in Alcan’s view, do not typify normal operating
activities.

Statements made in this press release which describe the company’s or
management’s objectives, projections, estimates, expectations or predictions of
the future may be "forward-looking statements" within the meaning of securities
laws. All statements that address the company’s expectations or projections
about the future including statements about the company’s growth, cost
reduction goals, operations reorganization plans, expenditures and financial
results are forward-looking statements. The company cautions that, by their
nature, forward-looking statements involve risk and uncertainty and that the
company’s actual actions or results could differ materially from those
expressed or implied in such forward-looking statements or could affect the
extent to which a particular projection is realized. Reference should be made
to the company’s most recent Quarterly Report on Form 10-Q for a summary of
factors that could cause such differences.

The company undertakes no obligation to release publicly the results of any
future revisions it may make to forward-looking statements to reflect events or
circumstances after the date of this press release or to reflect the occurrence
of unanticipated events. Furthermore, the company undertakes no obligation, in
relation to future quarterly earnings disclosures, to release publicly any
information on an interim basis prior to the final earnings disclosure.

Note: All amounts in this press release are expressed in US dollars
unless otherwise stated.

SOURCE: Alcan Inc.

CONTACT: Media Contact:

Anik Michaud,
+1-514-848-8151,
media.relations@alcan.com;

Investor Contact:

Corey Copeland,
+1-514-848-8368,
investor.relations@alcan.com

(AL. AL)