Aluminum maker Alcoa (AA | charts | news | PowerRating) revealed that it would explore strategic alternatives for the disposition of its Packaging and Consumer segment.

Alain Belda, CEO said, "Our packaging and consumer business is improving and strengthening. In fact, first quarter earnings more than doubled compared to the prior year as the benefits of our restructuring program are hitting the bottom line. However, now is the right time for us to explore whether these businesses may provide more value on their own or as part of another company."

The segment accounted for about 10%, or $3.2 billion, of the company's revenues and about 3%, or $95 million, of after-tax operating income in 2006.

Businesses that will be included in the review of strategic alternatives include Flexible Packaging, manufacturers of non-rigid packaging materials.

Other businesses for which the company is exploring strategic alternatives include Closure Systems International, a manufacturer of plastic and aluminum packaging closures and Consumer Products, a maker of branded and private label foil.

Alcoa is also reviewing strategic alternatives for Reynolds Food Packaging, makers of stock and custom products for the foodservice, supermarket, food processor and agricultural markets.

In total, these packaging businesses have approximately 10,000 employees in 22 countries around the world.

Separately, the company noted it would explore strategic alternatives involving its Electrical and Electronic Solutions (formerly the AFL wireharness business), and automotive castings businesses. These businesses had combined 2006 revenues of approximately $1.6 billion and were marginally profitable.

While there can be no assurance that exploration of alternatives will result in any type of transaction, Alcoa believes this initiative should unlock the value in these businesses.

The New York-based company anticipates the process will be completed by the end of 2007.

During the month, Alcoa heralded the first quarter reporting season with an impressive quarterly performance, posting what it claimed to be the strongest first quarter income in its history.

Net income for the recently concluded first quarter was $662 million or 75 cents per share compared to $608 million or 69 cents last year. Alcoa's top-line grew 11% in the first quarter to $7.9 billion from $7.11 billion in the year-ago period, with the company attributing the upside to higher metal prices.

The packaging and consumer segment for the quarter reported a decline in sales, while its after tax operating profits rose to $19 million from $8 million last year due to the result of the restructuring initiatives.

In late January, the company announced a capital restructuring program that includes repurchase of about 10% of its outstanding shares over the next three years, issuance of up to $2 billion of senior notes and an upward revision of its dividend by 13%.

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