Alcan First Quarter 2007 Sets New Earnings Records



    
    Positive Second Quarter Outlook Based on LME Strength

    FINANCIAL HIGHLIGHTS
    --------------------

    - Record income from continuing operations of $1.60 per common share
      compared to $1.21 a year earlier and $1.12 in the fourth quarter of
      2006;
    - Record operating earnings of $1.67 per common share compared to $1.26 a
      year earlier and $1.09 in the fourth quarter of 2006;
    - Cash flow from operating activities in continuing operations of
      $582 million, a first-quarter record, compared to $362 million a year
      earlier and a record $1.1 billion in the fourth quarter of 2006;
    - Debt as a percentage of invested capital of 33% at the end of the first
      quarter compared to 35% at the end of 2006 and 40% at the end of 2005;
    - Selling, General and Administrative expenses at 5.8% of revenues, down
      from 6.6% a year earlier and 6.7% last quarter.
    

    MONTREAL, April 24 /CNW Telbec/ - Alcan Inc. today reported record
operating earnings of $1.67 per common share in the first quarter of 2007
compared to $1.26 a year ago and $1.09 in the fourth quarter of 2006.
    "Alcan's continued focus on execution has helped deliver another
outstanding result this quarter," said Dick Evans, President and CEO. "Ongoing
financial discipline, combined with the favourable business conditions that
prevailed during the quarter, boosted earnings and returns on capital employed
to new levels. Looking forward, our strong cash flow performance and positive
outlook continue to provide the financial flexibility to consider multiple
options for capital allocation," he continued.
    "An improved performance across all business groups reflects our
sustained emphasis on cost control, financial discipline and profitable
growth. Alcan's increased earnings power continues to come into focus through
these results and, considering the current strength in the primary metal
market and our favourable competitive position, we expect to see continued
positive results in the second quarter," he concluded.

    (*)Note: All amounts in this press release are expressed in US dollars
    unless otherwise stated. This press release includes a number of
    measures for which no meaning is prescribed by generally accepted
    accounting principles (GAAP). Refer to the section "Definitions" for
    an explanation of these measures.

    
    -------------------------------------------------------------------------
                                                                      Fourth
                                                     First Quarter   Quarter
                                              -------------------------------
    ($ millions, except where indicated)            2007      2006      2006
    -------------------------------------------------------------------------
    Operating earnings - excluding foreign
     currency balance sheet translation and
     Other Specified Items                           618       473       406

    Foreign currency balance sheet translation       (19)       (9)       97
    Other Specified Items (OSIs)                      (9)      (10)      (85)
                                              -------------------------------
    Income from continuing operations                590       454       418
    Income from discontinued operations                1         3         4
    Cumulative effect of accounting change             -        (4)        -
                                              -------------------------------
    Net income                                       591       453       422
                                              -------------------------------
    Basic earnings per common share
     ($ per common share)
      Operating earnings                            1.67      1.26      1.09
      Income from continuing operations             1.60      1.21      1.12
      Net income                                    1.60      1.21      1.13
    Average number of common shares
     outstanding (millions)                        367.1     373.1     371.5
    -------------------------------------------------------------------------

    Operating Earnings

    Operating earnings from continuing operations exclude foreign currency
balance sheet translation effects and Other Specified Items (OSIs). Operating
earnings of $618 million in the first quarter of 2007 were $145 million higher
than in the comparable quarter a year ago. The improvement mainly reflected
higher aluminum prices and better pricing, product mix and volumes in the
downstream businesses. These were partly offset by increased raw materials and
energy costs, a reduction of technology license fees recognized in relation to
the Oman smelter project, unfavourable non-cash mark-to-market adjustments on
derivatives as well as the negative impact of stronger European currencies.
Compared to the fourth quarter of 2006, operating earnings were up
$212 million, mainly reflecting increased aluminum prices, favourable non-cash
mark-to-market adjustments on derivatives, improved pricing and product mix
mainly in Engineered Products, lower head office costs and higher volumes in
the downstream businesses principally due to seasonality. These benefits more
than offset higher costs for raw materials and energy, as well as lower
volumes in the upstream businesses.
    Included in operating earnings for the first quarter of 2007 were non-cash
mark-to-market charges on derivatives of $0.02 per common share as compared to
gains of $0.03 a year earlier and charges of $0.17 in the fourth quarter of
2006.

    Income from Continuing Operations

    Income from continuing operations was $590 million or $1.60 per common
share for the first quarter of 2007 versus income of $454 million or $1.21 a
year earlier and income of $418 million or $1.12 in the fourth quarter of
2006.
    Included in income from continuing operations for the first quarter of
2007 was a primarily non-cash, after-tax loss of $19 million or $0.05 per
common share for the effects of foreign currency balance sheet translation,
compared to an after-tax loss of $9 million or $0.02 in the year-ago quarter
and an after-tax gain of $97 million or $0.26 in the fourth quarter of 2006.
    Also included in income from continuing operations for the first quarter
of 2007 were after-tax charges of $9 million or $0.02 per common share for
OSIs. These were comprised mainly of restructuring charges of $7 million which
included costs related to the Company's Affimet aluminum recycling plant in
Compiègne, France.

    Net Income

    Including OSIs, foreign currency balance sheet translation, and
discontinued operations, net income was $591 million or $1.60 per common share
for the first quarter of 2007.

    Sales and Operating Revenues
    -------------------------------------------------------------------------
                                                                      Fourth
                                                     First Quarter   Quarter
                                              -------------------------------
    ($ millions, unless otherwise noted)            2007      2006      2006
    -------------------------------------------------------------------------

    Sales and operating revenues ($M)              6,420     5,550     6,219
    Shipment volumes (kt)
      Ingot products (*)                             744       749       776
      Aluminum used in engineered
       products & packaging                          342       337       314
                                              -------------------------------
    Total aluminum volume                          1,086     1,086     1,090

    Aluminum pricing data ($ per tonne)
      Ingot product realizations (*)               2,835     2,454     2,712
      Average LME 3-month price (one-month lag)    2,760     2,369     2,631
    -------------------------------------------------------------------------
    (*) The bulk of Alcan's ingot product sales are based on the LME 3-month
        price with a one-month lag plus a local market premium and any
        applicable product premium.
    -------------------------------------------------------------------------

    Sales and operating revenues of $6,420 million were up $870 million
compared to the year-ago quarter mainly reflecting higher aluminum prices as
well as favourable pricing, product mix and volumes in downstream businesses.
Compared to the fourth quarter of 2006, sales and operating revenues increased
by $201 million mainly as a result of higher aluminum prices, increased
volumes in downstream businesses and product mix and pricing improvements,
mainly in Engineered Products.
    The average realized price on sales of ingot products during the first
quarter was up $381 per tonne from the year-ago quarter and up $123 per tonne
from the fourth quarter of 2006. The increases over both the year-ago and
sequential quarters mainly reflected the impact of higher LME aluminum prices.

    Cash Flow and Debt
    -------------------------------------------------------------------------
                                                                      Fourth
                                                     First Quarter   Quarter
                                              -------------------------------
    ($ millions, except where indicated)            2007      2006      2006
    -------------------------------------------------------------------------

    Cash flow from operating activities in
     continuing operations                           582       362     1,104
      Dividends                                      (75)      (58)      (76)
      Capital expenditures                          (312)     (426)     (610)
                                              -------------------------------
    Free cash flow from continuing operations        195      (122)      418
    -------------------------------------------------------------------------

    Cash flow from operating activities in continuing operations increased by
$220 million compared to the year-ago quarter and decreased by $522 million
compared to the fourth quarter of 2006. The increase in cash from operating
activities in continuing operations over the year-ago quarter mainly reflects
higher earnings and a less unfavourable movement in operating working capital,
partially offset by an unfavourable movement in deferred items. The decrease
over the prior quarter principally reflects seasonally typical unfavourable
movements in operating working capital and deferred items which more than
offset higher earnings. Debt as a percentage of invested capital as at
March 31, 2007 was 33%, down from 35% at the end of the fourth quarter of 2006
due to lower debt and higher equity.

    REVIEW OF BUSINESS GROUP PROFIT AND CORPORATE ITEMS
    ---------------------------------------------------

    -------------------------------------------------------------------------
                                                                      Fourth
                                                     First Quarter   Quarter
                                              -------------------------------
    ($ millions)                                    2007      2006      2006
    -------------------------------------------------------------------------
    Business Group Profit (BGP)
      Bauxite and Alumina                            175       129       156
      Primary Metal                                  844       758       755
      Engineered Products                            174       154       168
      Packaging                                      140       146       109
                                              -------------------------------
        Subtotal                                   1,333     1,187     1,188
                                              -------------------------------
      Equity accounted joint venture
       eliminations                                  (47)      (71)      (19)
      Change in fair market value of
       derivatives                                   (15)       14       (82)
                                              -------------------------------
                                                   1,271     1,130     1,087

    Corporate Items
      Intersegment, corporate offices and other      (89)     (107)     (255)
      Depreciation & amortization                   (264)     (251)     (261)
      Interest                                       (60)      (76)      (76)
      Income taxes                                  (280)     (269)      (55)
      Equity income (loss)                            12        28       (21)
      Minority interests                               -        (1)       (1)
                                              -------------------------------
    Income from continuing operations                590       454       418
    -------------------------------------------------------------------------

    Bauxite and Alumina: BGP for the first quarter was $175 million, an
increase of $46 million compared to the year-ago quarter. Excluding OSIs and
balance sheet translation effects, the year-over-year increase in BGP was   
$51 million or 40%. This improvement mainly reflected higher LME-linked
contract prices for alumina (given the normal one-quarter lag) partially
offset by the impact of the national strike in Guinea, lower shipment volumes,
higher raw material and operating costs and exchange losses due to the
strengthening Australian dollar. On a sequential basis, BGP for the group was
$19 million above the previous quarter. Excluding OSIs and balance sheet
translation effects, BGP increased by $17 million or 10%, reflecting higher
LME-linked contract prices partially offset by the impact of the national
strike in Guinea, higher operating costs and lower shipment volumes. The
national strike in Guinea cost the business group $21 million in BGP in the
first quarter, and is expected to cost an additional $12 million in BGP in the
second quarter. Results for the second quarter of 2007 are expected to be
higher than the first quarter as a result of higher LME-linked contract prices
and a reduced impact of Guinea's national strike.

    Primary Metal: BGP for the first quarter was a business group record at
$844 million, up $86 million as compared to the year-ago quarter. Excluding
OSIs and balance sheet translation effects, the year-over-year increase in BGP
was $90 million or 12%. The improvement mainly reflected higher aluminum
prices as well as additional contribution from the acquisition of the cathode
producer Carbone Savoie, partially offset by higher input costs (alumina,
electricity and fuel-related raw material costs), lower revenues from the sale
of technology (mainly the non-recurrence of revenue associated with the Oman
project), the adverse impact of the stronger European currencies on costs and
higher operating costs. On a sequential quarter basis, BGP increased by      
$89 million. Excluding OSIs and balance sheet translation effects, BGP
increased by $112 million or 15%, reflecting higher aluminum prices and lower
operating costs. These favourable impacts were partially offset by higher
input costs (alumina, electricity and fuel-related raw material costs), lower
volumes and lower contributions from power generation. Based on current
forward prices for aluminum and rates for currency (including the recent
weakening of the US dollar), results for the second quarter are expected to be
similar to those of the first quarter.

    Engineered Products: BGP for the first quarter was a business group record
at $174 million, up $20 million or 13% from a year earlier. Excluding OSIs and
balance sheet translation, the year-over-year increase in BGP was   $21
million or 13%. The year-over-year improvement mainly reflected better prices
and sales mix in most of the group's businesses, most notably Cable and
Aerospace. This was partly offset by lower metal timing benefits, higher
aluminum input costs and higher operating costs. On a sequential quarter
basis, BGP increased by $6 million or 4%. Excluding OSIs and balance sheet
translation effects, the sequential increase in BGP was $12 million or 7%,
reflecting normal seasonal volume improvements, better prices and improved
sales mix, partially offset by higher input and operating costs. BGP for the
second quarter is expected to decline slightly due to margin pressure, mainly
in the softer North American markets.

    Packaging: BGP in the first quarter of $140 million was down $6 million or
4% from the prior-year quarter. Excluding the impact of OSIs, foreign currency
balance sheet translation effects and lost contributions from divested
businesses, BGP improved by $9 million or 7%. The year-on-year improvement was
mainly due to volume growth initiatives, margin management in the face of
input cost pressure and a stronger Euro compared to the US dollar. On a
sequential quarter basis, BGP increased by $31 million or 28%. Excluding the
impact of OSIs, foreign currency balance sheet translation effects and lost
contributions from divested businesses, BGP increased by $18 million or 14%.
The growth drivers were stronger volumes from both seasonal effects and
organic growth initiatives plus cost savings measures. BGP in the second
quarter of 2007 is expected to improve compared to the first quarter as
progress continues to be made in operating efficiencies.

    Corporate Items

    The Intersegment, corporate offices and other expense category includes
corporate head office costs as well as other non-operating items and the
elimination of profits on intersegment sales of aluminum. The reduction of  
$18 million compared to the first quarter of 2006 mainly reflects share-based
compensation. The reduction of $166 million compared to the fourth quarter of
2006 reflects mainly the reduction of restructuring, asset impairment and
closed-site asset retirement obligation charges as well as lower head office
costs.
    Depreciation and amortization expenses were $13 million higher than in the
year-ago quarter primarily reflecting increased depreciation at the Gove
alumina refinery in Australia. Depreciation and amortization expenses were
comparable to the prior quarter.
    Interest expense, net of capitalized interest, was $16 million lower than
in both the year-ago and prior-year quarters mainly reflecting a higher level
of capitalized interest and reduced debt levels. In the first quarter of 2007,
capitalized interest was $23 million compared to $14 million a year ago and
$16 million in the fourth quarter of 2006, all largely related to the Gove
expansion.
    The Company's effective tax rate on income from continuing operations was
33% in the first quarter. Balance sheet translation losses due to the
strengthening of the Canadian dollar increased the effective tax rate.

    Share Repurchase Program

    As at March 31, 2007, Alcan had purchased 9,831,200 common shares at an
average price of $47.42 per share for a total cost of $466 million. This
represents 52% of the total number of shares approved for repurchase.

    OUTLOOK
    -------

    For 2007, world primary aluminum consumption is forecast to increase by
approximately 8.9% (6.9% in 2006), while production from new capacity and
restarts is expected to increase world supply by about 10% (6.4% in 2006). As
a consequence the company expects the market to generate a modest surplus in
2007 of approximately 200 kt, versus a deficit of 162 kt in 2006. This would
represent about 0.5% of estimated total world supply in 2007. Inventories, as
expressed in weeks of shipments, are expected to remain at historically low
levels of about five and a half weeks.

    KEY EARNINGS SENSITIVITIES
    --------------------------

    The following table provides Alcan estimates of the annualized after-tax
impact of currency and LME price movements on income from continuing
operations, net of hedging and forward sales.

                                                Increase        In
                                                 in rate  millions  $/common
                                                  /price      of $     share
    -------------------------------------------------------------------------

    Economic impact of changes in
     period-average exchange rates
      European currencies                          $0.10       (50)    (0.14)
      Canadian dollar                              $0.10      (150)    (0.42)
      Australian dollar                            $0.10       (70)    (0.19)
    -------------------------------------------------------------------------

    Balance sheet translation impact of
     changes in period-end exchange rates
      Canadian dollar                              $0.10      (230)    (0.63)
      Australian dollar                            $0.10       (25)    (0.07)
    -------------------------------------------------------------------------

    Economic impact of changes in
     period-average LME prices(*)
      Aluminum                                      $100/t     190      0.51
    -------------------------------------------------------------------------
    (*) Realized prices generally lag LME price changes by one month. Changes
        in local and regional premia may also impact aluminum price
        realizations. Sensitivities are updated as required to reflect
        changes in the company's commercial arrangements and portfolio of
        operations. Not included are sensitivities to energy and raw-material
        prices, which may have significant impacts.


    Cautionary Statement
    --------------------

    Statements made in this quarterly earnings 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 which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "would," "estimates," "plans," "anticipates" or the negative thereof
or other variations thereon. 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. Such
statements may be based on the company's own research and analysis. 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 Annual Report
on Form 10-K for a list of factors that could cause such differences.
    Important factors which could cause such differences include: changes in
global supply and demand conditions for aluminum and other products; cyclical
demand and pricing within the principal markets for the company's products;
changes in the relative value of various currencies; fluctuations in the
supply of and prices for power in the areas in which the company maintains
production facilities; changes in aluminum ingot prices and changes in raw
material costs and availability; competition in highly competitive markets;
changes in prevailing interest rates and equity market returns related to
pension plan investments; economic, regulatory and political factors within
the countries in which the company operates or sells its products; the risk of
significant losses from trading operations, including losses due to market and
credit risks associated with derivatives; changes in government regulations,
particularly those affecting environmental, health or safety compliance; risks
related to the use of hazardous materials in manufacturing processes; delay
and cost risks related to significant capital projects; the consequences of
transferring most of the aluminum rolled products businesses operated by the
company to Novelis Inc.; relationships with, and financial and operating
conditions of, customers and suppliers; willingness of customers to accept
substitution by competing products; major changes in technology that affect
the company's competitiveness; potential catastrophic damage, increased
insurance and security costs and general uncertainties associated with the
increased threat of terrorism or war; the effect of international trade
disputes on the company's ability to import materials, export its products and
compete internationally; the effect of integrating acquired businesses and the
ability to attain expected benefits; potential discovery of unanticipated
commitments or other liabilities associated with the acquisition and
integration or disposition of businesses; and other factors affecting the
company's operations including, but not limited to, litigation, labour
relations and negotiations and fiscal regimes.
    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.

    DEFINITIONS
    -----------

    "$" all amounts are in US dollars.
    "Business Group Profit" (BGP) comprises earnings before interest, income
taxes, minority interests, depreciation and amortization and excludes certain
items, such as corporate costs, restructuring costs (relating to major
corporate-wide acquisitions or initiatives), impairment and other special
charges, pension actuarial gains, losses and other adjustments, and unrealized
gains and losses on derivatives, that are not under the control of the
Business Groups or are not considered in the measurement of their
profitability. These items are generally managed by the Company's corporate
head office, which focuses on strategy development and oversees governance,
policy, legal, compliance, human resources and finance matters. Financial
information for individual business groups includes the results of certain
joint ventures and other investments accounted for using the equity method on
a proportionately consolidated basis, which is consistent with the way the
business groups are managed. However, the BGP of these joint ventures and
equity-accounted investments is removed from total BGP for the company and the
net after-tax results are reported as equity income. The unrealized change in
the fair market value of derivatives has been removed from individual business
group results and is shown on a separate line within total BGP. This
presentation provides a more accurate portrayal of underlying business group
results and is in line with the company's portfolio approach to risk
management.
    "Debt as a percentage of invested capital" does not have a uniform
definition. Because other issuers may calculate debt as a percentage of
invested capital differently, Alcan's calculation may not be comparable to
other companies' calculations. The figure is calculated by dividing borrowings
by total invested capital. Total invested capital is equal to the sum of
borrowings and equity, including minority interests. The company believes that
debt as a percentage of invested capital can be a useful measure of its
financial leverage as it indicates the extent to which it is financed by debt
holders. The measure is widely used by the investment community and credit
rating agencies to assess the relative amounts of capital put at risk by debt
holders and equity investors.
    "Derivatives" including forward contracts, swaps and options are financial
instruments used by the company to manage the specific risks arising from
fluctuations in exchange rates, interest rates, aluminum prices and other
commodity prices. Mark-to-market gains and losses on derivatives will be
offset over time by gains and losses on the underlying exposures.
    "Foreign currency balance sheet translation" effects largely arise from
translating monetary items (principally deferred income taxes and long-term
liabilities) denominated in Canadian and Australian dollars into US dollars
for reporting purposes. Although these effects are primarily non-cash in
nature, they can have a significant impact on the company's net income.
    "Free cash flow from continuing operations" consists of cash from
operating activities in continuing operations less capital expenditures and
dividends. Management believes that free cash flow, for which there is no
comparable GAAP measure, is relevant to investors as it provides an indication
of the cash generated internally that is available for investment
opportunities and debt service.
    "GAAP" refers to US Generally Accepted Accounting Principles.
    "LME" refers to the London Metal Exchange.
    "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.
    "Operating earnings from continuing operations" is presented in addition
to income from continuing operations and reported net income. Operating
earnings from continuing operations are not calculated in accordance with US
GAAP and there is no standard definition of this term. Accordingly, it is
unlikely that comparisons can be made among different companies that make
operating earnings information available. The determination of whether an item
is treated as an Other Specified Item involves the exercise of judgement by
Alcan management. The company believes that operating earnings from continuing
operations is a useful measure because it excludes items that are not typical
of ongoing operating activities, such as Other Specified Items, as well as
items that are outside management's control, such as the impact of foreign
currency balance sheet translation. Management has concluded that operating
earnings is a relevant measure for shareholders and other investors as it
removes the inherent volatility of such items, whether favourable or
unfavourable, and provides a clearer picture of underlying business
performance. Moreover, the measure is in line with the company's internal
performance measurement and management systems. Operating earnings information
has historically been presented in response to requests from investors and
financial analysts, who have indicated that they find the information highly
relevant and essential to their understanding of the company.
    All tonnages are stated in metric tonnes, equivalent to 2,204.6 pounds.
    All figures are unaudited.

    QUARTERLY RESULTS WEBCAST
    -------------------------

    Alcan's quarterly results conference call with investors and analysts will
take place on Tuesday, April 24, 2007 at 10:00 a.m. EDT and will be webcast
via the Internet at www.alcan.com.
    Supporting documentation (press release, financial statements and investor
presentation) is available at www.alcan.com, using the Investors link.
Miscellaneous and previous years' filings may be accessed using the following
websites: www.sec.gov (US) and www.sedar.com (Canada) websites.

    ALCAN INC.
    ----------

    Alcan Inc. (NYSE, TSX: AL) is a leading global materials company,
delivering high quality products and services worldwide. With world-class
technology and operations in bauxite mining, alumina processing, primary metal
smelting, power generation, aluminum fabrication, engineered solutions as well
as flexible and specialty packaging today's Alcan is well positioned to meet
and exceed its customers' needs. Alcan is represented by 68,000 employees,
including its joint-ventures, in 61 countries and regions, and posted revenues
of $23.6 billion in 2006. The company has featured on the Dow Jones
Sustainability World Index consecutively since 2003. For more information,
please visit: www.alcan.com.


                                 ALCAN INC.
                                 ----------

    INTERIM CONSOLIDATED STATEMENT OF INCOME (unaudited)
    -------------------------------------------------------------------------
    Three months ended March 31                               2007      2006
                                                        ---------------------
                                                        ---------------------
    (in millions of US$, except per share amounts)

    Sales and operating revenues                             6,420     5,550

    Costs and expenses
    Cost of sales and operating expenses, excluding
     depreciation and amortization noted below               4,801     4,128
    Depreciation and amortization                              264       251
    Selling, administrative and general expenses               374       364
    Research and development expenses                           54        52
    Interest                                                    60        76
    Restructuring charges - net                                 12        14
    Other income - net                                          (3)      (31)
                                                        ---------------------
                                                             5,562     4,854
                                                        ---------------------
    Income from continuing operations before income
     taxes and other items                                     858       696
    Income taxes                                               280       269
                                                        ---------------------
    Income from continuing operations before other
     items                                                     578       427
    Equity income                                               12        28
    Minority interests                                           -        (1)
                                                        ---------------------
    Income from continuing operations                          590       454
    Income from discontinued operations                          1         3
                                                        ---------------------
    Income before cumulative effect of accounting
     change                                                    591       457
    Cumulative effect of accounting change, net
     of income taxes of $2 in 2006                               -        (4)
                                                        ---------------------
    Net income                                                 591       453
    Dividends on preference shares                               3         2
                                                        ---------------------
    Net income attributable to common shareholders             588       451
                                                        ---------------------
                                                        ---------------------
    Earnings (Loss) per share
    Basic:
    Income from continuing operations                         1.60      1.21
    Income from discontinued operations                          -      0.01
    Cumulative effect of accounting change                       -     (0.01)
                                                        ---------------------
    Net income per common share - basic                       1.60      1.21
                                                        ---------------------
                                                        ---------------------
    Diluted:
    Income from continuing operations                         1.59      1.20
    Income from discontinued operations                          -      0.01
    Cumulative effect of accounting change                       -     (0.01)
                                                        ---------------------
    Net income per common share - diluted                     1.59      1.20
                                                        ---------------------
                                                        ---------------------
    Dividends per common share                                0.20      0.15
                                                        ---------------------
                                                        ---------------------

                                 ALCAN INC.
                                 ----------

    INTERIM CONSOLIDATED BALANCE SHEET (unaudited)
    -------------------------------------------------------------------------
                                                             March  December
                                                          31, 2007  31, 2006
                                                        ---------------------
                                                        ---------------------
    (in millions of US$)

    ASSETS
    ------

    Current assets
    Cash and time deposits                                     186       229
    Trade receivables (net of allowances of $67 in 2007
     and $58 in 2006)                                        3,106     2,910
    Other receivables and deferred charges                   1,171     1,195
    Deferred income taxes                                      139       152
    Inventories                                              3,228     3,186
    Current assets held for sale                                 4         5
                                                        ---------------------
    Total current assets                                     7,834     7,677
                                                        ---------------------

    Deferred charges and other assets                        1,070     1,087
    Investments                                              1,476     1,509
    Deferred income taxes                                      911       989
    Property, plant and equipment
      Cost (excluding construction work in progress)        18,942    18,698
      Construction work in progress                          2,447     2,294
      Accumulated depreciation                              (8,800)   (8,592)
                                                        ---------------------
                                                            12,589    12,400
                                                        ---------------------
    Intangible assets, net of accumulated
     amortization of $370 in 2007 and $346 in 2006             655       676
    Goodwill                                                 4,597     4,599
    Long-term assets held for sale                               1         2
                                                        ---------------------
    Total assets                                            29,133    28,939
                                                        ---------------------
                                                        ---------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    ------------------------------------

    Current liabilities
    Payables and accrued liabilities                         5,335     5,430
    Short-term borrowings                                      579       467
    Debt maturing within one year                               32        36
    Deferred income taxes                                       35        46
                                                        ---------------------
    Total current liabilities                                5,981     5,979
                                                        ---------------------

    Debt not maturing within one year                        5,169     5,476
    Deferred credits and other liabilities                   1,681     1,787
    Post-retirement benefits                                 3,363     3,381
    Deferred income taxes                                    1,143     1,151
    Minority interests                                          71        71

    Shareholders' equity
    Redeemable non-retractable preference shares               160       160
    Common shareholders' equity
      Common shares                                          6,275     6,235
      Additional paid-in capital                               664       672
      Retained earnings                                      4,772     4,281
      Common shares held by a subsidiary                       (31)      (31)
      Accumulated other comprehensive loss                    (115)     (223)
                                                        ---------------------
                                                            11,565    10,934
                                                        ---------------------
                                                            11,725    11,094
                                                        ---------------------

    Total liabilities and shareholders' equity              29,133    28,939
                                                        ---------------------
                                                        ---------------------


                                 ALCAN INC.
                                 ----------

    INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
    -------------------------------------------------------------------------

    Three months ended March 31                               2007      2006
                                                        ---------------------
                                                        ---------------------
    (in millions of US$)

    OPERATING ACTIVITIES

    Income from continuing operations                          590       454
    Adjustments to determine cash from
     operating activities:
      Depreciation and amortization                            264       251
      Deferred income taxes                                     67       144
      Equity loss (income), net of dividends                     8       (16)
      Asset impairment charges                                   1         9
      Gain on disposal of businesses and
       investments - net                                        (4)        -
      Stock option expense                                       2        25
      Change in operating working capital
        Change in receivables                                 (165)     (539)
        Change in inventories                                  (27)      (78)
        Change in payables and accrued liabilities            (141)       20
      Change in deferred charges, other assets, deferred
       credits and other liabilities, and
       post-retirement benefits - net                           (7)       92
      Other - net                                               (6)        -
                                                        ---------------------
    Cash from operating activities                             582       362

    FINANCING ACTIVITIES

    Proceeds from issuance of new debt - net of
     issuance costs                                             13        17
    Debt repayments                                           (344)      (66)
    Short-term borrowings - net                                108       (36)
    Common shares issued                                        28        66
    Dividends - Alcan shareholders (including preference)      (75)      (57)
              - Minority interests                               -        (1)
                                                        ---------------------
    Cash used for financing activities                        (270)      (77)


    INVESTMENT ACTIVITIES

    Purchase of property, plant and equipment                 (312)     (426)
    Business acquisitions and purchase of investments,
     net of cash and time deposits acquired                     (2)      (38)
    Net proceeds from disposal of businesses,
     investments and other assets                                7       198
    Other                                                      (49)        -
                                                        ---------------------
    Cash used for investment activities                       (356)     (266)

    Effect of exchange rate changes on cash
     and time deposits                                           1         3
                                                        ---------------------
    (Decrease) Increase in cash and time deposits              (43)       22

    Cash and time deposits - beginning of period               229       181
                                                        ---------------------
    Cash and time deposits - end of period                     186       203
                                                        ---------------------
                                                        ---------------------


                                 ALCAN INC.
                                 ----------
                 (in millions of US$, except where indicated)

    1. BASIS OF PRESENTATION

    The unaudited interim consolidated financial information is based upon
accounting policies and methods of their application consistent with those
used and described in the Company's annual consolidated financial statements
as contained in the most recent Annual Report on Form 10-K (Form 10-K), except
for the new accounting policy that has been adopted effective January 1, 2007.
The unaudited interim consolidated financial information does not include all
of the financial statement disclosures included in the annual and quarterly
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America (US GAAP) and therefore
should be read in conjunction with the Company's most recent Form 10-K.
    In the opinion of management of the Company, the unaudited interim
consolidated financial information reflects all adjustments, which consist
only of normal and recurring adjustments, necessary to present fairly the
financial position and the results of operations and cash flows in accordance
with US GAAP. The results reported in this unaudited interim consolidated
financial information are not necessarily indicative of the results that may
be expected for the entire year.

    2. ACCOUNTING CHANGES

    FIN 48 - Accounting for Uncertainty in Income Taxes
    ---------------------------------------------------

    On January 1, 2007, the Company adopted the provisions of the Financial
Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty
in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48). Under
FIN 48, the Company may recognize the tax benefit from a tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater
than fifty percent likelihood of being realized upon settlement. FIN 48 also
provides guidance on derecognition, classification, interest and penalties on
income taxes, accounting in interim periods and expanded income tax
disclosures.
    On January 1, 2007, the Company recorded a $28 net increase in the
liability for unrecognized tax benefits. This net increase in liabilities
resulted in a decrease to the January 1, 2007 balance of Retained earnings of
$21, a net decrease in Deferred tax liabilities of $8 and a reduction of $1 in
equity-accounted investments in Deferred charges and other assets.

    3. CAPITALIZATION OF INTEREST COSTS

    Total interest costs in continuing operations in the first quarter ended
March 31, 2007 and 2006 were $83 and $90, respectively, of which $23 and $14
were capitalized.

    4. SUBSEQUENT EVENTS

    Effective April 2, 2007, the Company terminated a program to sell to a
third party an undivided interest in up to $125 ((euro) 95 million) of
selected trade receivables without recourse.
    On April 12, 2007, the Company announced its intention to sell its 45%
interest in India's Utkal Alumina International Limited (Utkal). The Utkal
project, which involves the development of a new bauxite mine and alumina
refinery in the Indian state of Orissa and is currently in an engineering
phase, will continue to benefit from an Alcan technology supply agreement. The
Company has already taken initial steps leading to the sale process and
expects completion during the second quarter of 2007.
    On April 23, 2007, the Company reached an agreement in principle to sell
its Satma subsidiary to ALMECO Spa. Located in Goncelin (France), Satma
manufactures and sells capacitor foil for the electronic industry as well as
anodized strip for the lighting and decoration markets. Final terms of the
agreement are expected to be completed following the conclusion of
consultations with employee representatives. The transaction is anticipated to
close by the end of May 2007.

    Montreal, Canada
    24 April 2007
    




For further information:

For further information: MEDIA CONTACT: Anik Michaud, (514) 848-8151,
Conference call numbers: North America (877) 652-1294, Local & overseas (706)
643-7783; INVESTOR CONTACT: Simon Ellinor, (514) 848-8368, Conference call
numbers: North America (877) 421-3963, Local & overseas (706) 643-9535

Organization Profile

ALCAN - EN

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