Arconic Inc. will split into two separate businesses, Engineered Products & Forgings and Global Rolled Products. The decision by company directors, along with a cost-cutting initiative, both announced together with Arconic’s 2018 results.
Arconic was formed in 2016 in a similar break-up of Alcoa Inc.: that group’s mining, refining, and primary aluminum production remained in one portfolio (the current Alcoa), and the rolled products, engineered products, transportation, and construction product lines formed the new business. Via its forging, ring rolling, casting, additive manufacturing, and other manufacturing capabilities, Arconic is a significant supplier of lightweight components for aerospace, automotive, commercial transportation, and defense markets.
In January, Arconic directors voted down a USD 10.7bn deal offered by Apollo Global Management that would have represented the largest industrial privatization in recent history. Like other large engineering and industrial businesses, the organization has been under investor pressure to maximize shareholders’ returns.
The company has not defined the process or set a schedule for separating the two divisions. Together with the separation strategy, Arconic initiated plans to reduce operating costs by approximately USD 200M this year.
During Q4 2018, Arconic closed the sale of an idled rolling mill in Texarkana, TX, to Ta Chen International Inc.; and of its Eger, Hungary, forging business to Angstrom Automotive Group LLC. Arconic reported 2018 Q4 revenues of USD 3.5bn, up 6% year-over-year, and full-year 2018 revenue of USD 14.0bn, up 8% year-over-year.