During its fourth quarter and full year 2018 results presentation, Arconic Inc. announced plans to restructure its business into two separate businesses. “As part of [the company’s] strategy and portfolio review, we have determined to separate the portfolio into Engineered Products & Forgings and Global Rolled Products,” said John C. Plant, who was recently named chief executive officer of the company.
Arconic currently operates three divisions: Engineered Products and Solutions, Global Rolled Products, and Transportation and Construction Solutions. Engineered Products and Solutions includes the manufacture of forged aerospace engine and industrial gas turbine components; the casting, forging, extruding, hot forming, machining, and 3D printing of titanium and aluminum products for the aerospace, defense, and oil and gas markets; and aerospace fastening systems. The Global Rolled Products division involves the manufacture of aluminum sheet and plate for the aerospace and automotive industries, as well as aluminum brazing sheet. Transportation and Construction Solutions includes its forged aluminum wheel manufacturing for the heavy-duty truck market and its building and construction operations.
As part of the restructuring, the company will split into into two operations — Engineered Products & Forgings and Global Rolled Products — and will explore the potential sale of operations that do not fit into these two businesses. “We will continue with the previously announced sale process for our Building and Construction Systems business,” said Plant.
Prior to this announcement, Arconic had been pursuing a potential sale of the company with Apollo Global Management LLC as the leading potential bidder. However, after a careful strategy and portfolio review process, the company decided not to move forward with such a sale. “We did not receive a proposal for a full-company transaction that we believe was in the best interests of our shareholders,” stated Plant. “The Board sees more shareholder value creation through a restructuring of the company.”
In the fourth quarter of 2018, Arconic closed on the sale of two of its facilities — the company sold its idled Texarkana, Texas, rolling mill to Ta Chen International, Inc. for approximately $300 million and its Eger, Hungary, forgings business to Angstrom Automotive Group LLC.
“Our team improved quality and delivery to customers in the face of increasing demand and record level shipment volumes in some segments,” said Plant. “Our continuous improvement efforts are gaining traction. Furthermore, we have commenced plans to reduce operating costs by approximately $200 million on an annual run-rate basis.”