ALU 1Q08 results: improvement, but ...

ALU reported revenues of €3.9bn (+6.3% at constant rate, but flat at current rate) with services revenues (+8.3% to €627m) and Enterprise sector (+3% to €371m) offsetting decline in the Carrier segment (-5% to €2.8bn). ALU was impacted by adverse euro/dollar exchange rate as it makes 50% of its sales in dollars. Gross margin increased 5% to €1.4bn or 36% of revenues (+2pp) and ALU reported an operating income of €36 (vs a loss of €244m last year), mainly due to the sale of intellectual property rights. Net loss in the quarter amounted to € 95, vs a €199 profit last year. On many aspects, it is an improvement from 1Q07, but the road will be still chaotic to profitability.

ALU management said that results are in line with expectations and they believe they are taking the right actions to position the company. ALU expects revenues to decline 2% to 5% in 2008 and remains sticked to its other 2008 forecasts. The share was down almost 8% to €4.1 following the announcement.