Alcoa’s heavy focus on cost cutting and a decision to shut the struggling Port Henry aluminium smelter has paid handsome dividends in Australia where it has recorded a three-fold lift in full-year profit.

Accounts filed with the corporate regulator reveal the Alcoa of Australia venture — owned 60 by US giant Alcoa and 40 per cent by locally listed Alumina — made a $645.5 million net profit in the year to December 31, up from $215.7 million in 2014.

Alcoa of Australia paid its two owners $190.1 million in dividends last year, compared with none in 2014.

The stunning improvement came despite a collapse in alumina prices in the second half of last year, to less than $US200 a tonne, which has put even more pressure on cost cutting at the bulk of Alcoa’s Australian operations, the two bauxite mines and three alumina refineries in the South West.

The accounts are light on commentary and Alcoa yesterday declined to expand on the 2015 performance.

But it shows revenue from continuing operations increased more than 6 per cent to $4.1 billion while the cost of the sale of goods fell 7 per cent to $2.9 billion. It is understood last year was one of strong production performances in WA, where Alcoa boasts some of the world’s best bauxite and alumina businesses.

Underscoring the strong improvement, Alcoa said its return on capital last year was 19.7 per cent, up from 13 per cent in 2014 (adjusted to exclude Point Henry closure costs). In 2012, when Alcoa was battling weak commodity prices as well as its struggling aluminium smelters in Victoria, the return on capital fell to just 3 per cent. Good performance of Alcoa of Australia is vital as Alcoa heads down the final strait of its company-defining break-up into separate upstream and downstream units late this year.

The Australian investments will make up a key part of the new (and smaller) Alcoa, with the specialty metals business to be hived off into in a newly created New York-listed vehicle called Arconic.

• [Editor:tianyawei]