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Alcan extends cash flow and earnings momentum to second quarter 2007

FINANCIAL HIGHLIGHTS

--------------------



- Income from continuing operations of $1.18 per common share compared to

$1.21 a year earlier and $1.60 in the first quarter;

- Operating earnings of $1.62 per common share compared to $1.48 a year

earlier and $1.67 in the first quarter;

- Cash flow from operating activities in continuing operations of

$738 million compared to $771 million a year earlier and $582 million

in the first quarter;

- Debt as a percentage of invested capital of 30% at the end of the

second quarter compared to 33% at the end of the first quarter.

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    MONTREAL, July 31 /PRNewswire-FirstCall/ - Alcan Inc. today reported
 operating earnings of $1.62 per common share in the second quarter of 2007
 compared to $1.48 a year ago and $1.67 in the first quarter.
     "These are the second highest quarterly operating earnings in Alcan's
 history, an achievement which reflects the ongoing commitment and focus of
 our dedicated employees", said Dick Evans, President and CEO. "Our strong
 performance in relation to operating earnings, cash flow generation and
 debt reduction is particularly noteworthy given the headwinds faced
 throughout the quarter from foreign exchange and energy costs. As we look
 ahead to our combination with Rio Tinto, we will continue to focus on
 execution and managing for value as well as aggressively building on our
 excellent pipeline of growth projects," he continued.
     "At the aluminum industry level, extremely strong Chinese demand growth
 should underpin ongoing favourable conditions. We continue to expect our
 financial results to reflect not only these favourable industry conditions,
 but also Alcan's very strong competitive position," he concluded.
     (x) 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.
 
     -------------------------------------------------------------------------
                                                                        First
                                                     Second Quarter   Quarter
                                                 -----------------------------
     ($ millions, except where indicated)            2007      2006      2007
     -------------------------------------------------------------------------
     Operating earnings - excluding foreign
      currency balance sheet translation and
      Other Specified Items                           603       556       618
 
     Foreign currency balance sheet translation      (193)     (100)      (19)
     Other Specified Items (OSIs)                      28        (2)       (9)
                                                 -----------------------------
 
     Income from continuing operations                438       454       590
     Income from discontinued operations                -         1         1
                                                 -----------------------------
     Net income                                       438       455       591
                                                 -----------------------------
     Basic earnings per common share
      ($ per common share)
       Operating earnings                            1.62      1.48      1.67
       Income from continuing operations             1.18      1.21      1.60
       Net income                                    1.18      1.21      1.60
     Average number of common shares outstanding
      (millions)                                    369.0     375.1     367.1
     -------------------------------------------------------------------------
 
 
     Operating Earnings
     Operating earnings from continuing operations exclude foreign currency
 balance sheet translation effects and Other Specified Items (OSIs).
 Operating earnings of $603 million in the second quarter of 2007 were $47
 million higher than in the comparable quarter a year ago. The improvement
 mainly reflected higher aluminum realizations, better pricing and mix in
 the Engineered Products and Bauxite & Alumina business segments, increased
 volumes across most businesses, contribution from the cathode producer
 Carbone Savoie and higher technology and smelter equipment sales. These
 were partly offset by the negative impact of a weaker US dollar on
 operating costs as well as increased energy, raw materials and operating
 costs. Compared to the first quarter, operating earnings were down $15
 million, mainly reflecting the negative impact of a weaker US dollar on
 operating costs, higher alumina costs, lower market premia, lower
 contribution from power generation, as well as higher share-based
 compensation related to the increase in share price during the quarter.
 These were partially offset by higher aluminum volumes, improved pricing
 and product mix mainly in Bauxite & Alumina, higher aluminum prices and
 technology and smelter equipment sales.
     Included in operating earnings for the second quarter of 2007 were
 non-cash mark-to-market charges on derivatives of $0.02 per common share
 compared to gains of $0.03 a year earlier and charges of $0.02 in the first
 quarter.
     Income from Continuing Operations
     Income from continuing operations was $438 million or $1.18 per common
 share for the second quarter of 2007 versus income of $454 million or $1.21
 a year earlier and income of $590 million or $1.60 in the first quarter.
     Included in income from continuing operations for the second quarter of
 2007 was a primarily non-cash, after-tax loss of $193 million or $0.52 per
 common share for the effects of foreign currency balance sheet translation,
 compared to an after-tax loss of $100 million or $0.27 in the year-ago
 quarter and an after-tax loss of $19 million or $0.05 in the first quarter.
 The foreign currency balance sheet translation losses in the second quarter
 of 2007 were largely due to the strengthening of the Canadian dollar versus
 the US dollar, which went from 86 cents at the end of the first quarter to
 94 cents at the end of the second quarter.
     Also included in income from continuing operations for the second
 quarter of 2007 were after-tax gains of $28 million or $0.08 per common
 share for OSIs. The most significant items included in OSIs were favourable
 tax adjustments of $150 million mainly related to the recognition of future
 tax benefits in France, partially offset by losses on disposals of assets,
 businesses and investments of $30 million primarily in connection with the
 sale of the Company's Vlissingen smelter in the Netherlands, charges of $14
 million principally related to previously announced restructuring in
 respect of packaging businesses as well as other charges of $66 million
 mainly comprising share-based compensation of $27 million resulting from
 the appreciation in the share price subsequent to the May 7, 2007 offer
 from Alcoa, correction of a net working capital overstatement (non-cash) of
 $18 million in the Packaging business, and advisory and legal fees of $14
 million related to the Company's efforts following the May 7, 2007 Alcoa
 offer to develop a full set of highest value alternatives consistent with
 the best interests of Alcan shareholders.
     Net Income
     Including OSIs and foreign currency balance sheet translation, net
 income was $438 million or $1.18 per common share for the second quarter of
 2007.
     Sales and Operating Revenues
 
     -------------------------------------------------------------------------
                                                                        First
                                                     Second Quarter   Quarter
                                                 -----------------------------
     ($ millions, except where indicated)            2007      2006      2007
     -------------------------------------------------------------------------
 
     Sales and operating revenues ($M)              6,605     6,103     6,420
     -------------------------------------------------------------------------
     Shipment volumes (kt)
       Ingot products(x)                              760       765       744
       Aluminum used in engineered products &
        packaging                                     342       341       342
                                                 -----------------------------
     Total aluminum volume                          1,102     1,106     1,086
     -------------------------------------------------------------------------
     Aluminum pricing data ($ per tonne)
       Ingot product realizations(x)                2,866     2,709     2,835
       Average LME 3-month price (one-month lag)    2,808     2,661     2,760
     -------------------------------------------------------------------------
     (x) 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 $6,605 million were up $502 million
 compared to the year-ago quarter mainly reflecting higher aluminum prices
 as well as favourable pricing, product mix and volumes across most
 businesses. Compared to the first quarter, sales and operating revenues
 increased by $185 million mainly as a result of higher aluminum volumes,
 improved pricing and product mix across most businesses, higher aluminum
 prices and technology and smelter equipment fees, partially offset by lower
 market premia and contribution from power generation.
     The average realized price on sales of ingot products during the second
 quarter was up $157 per tonne from the year-ago quarter and up $31 per
 tonne from the first quarter. The increases over both the year-ago and
 sequential quarters mainly reflected the impact of higher LME aluminum
 prices offset by lower market premia.
     Cash Flow and Debt
 
     -------------------------------------------------------------------------
                                                                        First
                                                     Second Quarter   Quarter
                                                 -----------------------------
     ($ millions, except where indicated)            2007      2006      2007
     -------------------------------------------------------------------------
 
     Cash flow from operating activities in
      continuing operations                           738       771       582
       Dividends                                      (73)      (58)      (75)
       Capital expenditures                          (421)     (469)     (312)
                                                 -----------------------------
     Free cash flow from continuing operations        244       244       195
     -------------------------------------------------------------------------
     Cash flow from operating activities in continuing operations at $738
 million decreased by $33 million compared to the year-ago quarter and
 increased by $156 million compared to the first quarter. The increase over
 the prior quarter principally reflects seasonally typical favourable
 movements in payables and deferred items which more than offset lower net
 income. Debt as a percentage of invested capital as at June 30, 2007 was
 30%, down from 33% at the end of the first quarter due to lower debt and
 higher equity.
     REVIEW OF BUSINESS GROUP PROFIT AND CORPORATE ITEMS
     ---------------------------------------------------
 
     -------------------------------------------------------------------------
                                                                        First
                                                     Second Quarter   Quarter
                                                 -----------------------------
     ($ millions)                                    2007      2006      2007
     -------------------------------------------------------------------------
     Business Group Profit (BGP)
       Bauxite and Alumina                            204       126       175
       Primary Metal                                  744       774       844
       Engineered Products                            149       144       174
       Packaging                                      126       134       140
                                                 -----------------------------
         Subtotal                                   1,223     1,178     1,333
                                                 -----------------------------
       Equity accounted joint venture
        eliminations                                  (75)      (86)      (47)
       Change in fair market value of derivatives      (7)        7       (15)
                                                 -----------------------------
                                                    1,141     1,099     1,271
     Corporate Items
       Intersegment, corporate offices and other     (229)     (159)      (89)
       Depreciation & amortization                   (269)     (258)     (264)
       Interest                                       (61)      (69)      (60)
       Income taxes                                  (166)     (195)     (280)
       Equity income                                   24        37        12
       Minority interests                              (2)       (1)        -
                                                 -----------------------------
     Income from continuing operations                438       454       590
     -------------------------------------------------------------------------
     Bauxite and Alumina: BGP for the second quarter was a record $204
 million, an increase of $78 million compared to the year-ago quarter.
 Excluding OSIs and foreign currency balance sheet translation effects, the
 year-over-year increase in BGP was $86 million or 60%. This improvement
 mainly reflected higher LME-linked contract prices for alumina (given the
 normal one-quarter lag), higher technology-related profits as well as
 improved sales mix, partially offset by exchange losses due to the
 strengthening Australian and Canadian dollars, higher raw material costs
 and the residual impact from the national strike in Guinea during the first
 quarter of 2007. On a sequential basis, BGP for the group was $29 million
 above the previous quarter. Excluding OSIs and foreign currency balance
 sheet translation effects, BGP increased by $50 million or 28%, reflecting
 a favorable change in sales mix, lower operating costs, lower adverse
 impact from the Guinean national strike during the first quarter of 2007
 and higher volumes, partially offset by higher raw material costs and
 exchange losses due to the strengthening Australian and Canadian dollars.
 To date, the total impact of the national strike in Guinea during the first
 quarter across B&A was $36 million, of which $15 million impacted in the
 second quarter. Results for the third quarter of 2007 are expected to be
 slightly higher than the second quarter as a result of higher shipments
 (partly related to Gove expansion capacity beginning to come on-stream) and
 higher bauxite profits.
     Primary Metal: BGP for the second quarter was $744 million, a decrease
 of $30 million as compared to the year-ago quarter. Excluding OSIs and
 foreign currency balance sheet translation effects, the year-over-year
 decrease in BGP was $26 million or 3%. The decline mainly reflected higher
 input costs (alumina, electricity and carbon-related raw material costs),
 the adverse effect of the weaker US dollar, higher operating costs, as well
 as lower market premia, partially offset by higher LME metal prices,
 volumes and contribution from the cathode producer Carbone Savoie. On a
 sequential quarter basis, BGP decreased by $100 million. Excluding OSIs and
 foreign currency balance sheet translation effects, BGP decreased by $76
 million or 9%, reflecting higher input costs (alumina, electricity and
 carbon-related raw material costs), the adverse effect of the weaker US
 dollar, lower contributions from power generation and lower market premia.
 These unfavorable impacts were partially offset by higher volumes, higher
 LME and higher contribution from technology and smelter equipment sales. As
 a result of lost contribution from the divestiture of the Vlissingen
 smelter in the Netherlands, and assuming current forward prices for
 aluminum and forward exchange rates, results for the third quarter are
 expected to be somewhat lower than the second quarter.
     Engineered Products: BGP for the second quarter was $149 million.
 Excluding OSIs and foreign currency balance sheet translation effects,
 operating results were $162 million, or $7 million higher than a year
 earlier. Results for the second quarter of 2006 included significant metal
 timing benefits; a consequence of the rapid rise in LME prices in earlier
 quarters. Adjusting for these non-cash accounting benefits, the operating
 performance of the group improved by approximately 20 percent year over
 year on the back of strong results from the Cable, Composites and Aerospace
 businesses. On a sequential quarter basis, BGP was $25 million lower than
 in the first quarter of the year. Excluding OSIs and foreign currency
 balance sheet translation effects, operating results were $16 million lower
 principally due to the absence of beneficial metal timing effects.
 Adjusting for these non-cash accounting benefits, the performance of the
 group was equivalent to the record level of the first quarter, a reflection
 of the generally firm business conditions evident through the first half of
 the year. Operating results for the third quarter are expected to be lower
 due to the usual summer holiday closures in Europe.
     Packaging: BGP in the second quarter of $126 million was down $8
 million or 6% from the prior-year quarter. Excluding the impact of OSIs,
 foreign currency balance sheet translation effects and lost contributions
 from divested businesses, BGP was $165 million, an improvement of $12
 million or 8%. The year-on-year improvement was mainly due to operational
 savings and restructuring measures, a stronger euro compared to the US
 dollar and volume growth initiatives. On a sequential quarter basis, BGP
 decreased by $14 million or 10%. Excluding the impact of OSIs and foreign
 currency balance sheet translation effects, BGP increased by $20 million or
 14% as a result of stronger volumes and cost saving measures. Operating BGP
 in the third quarter of 2007 is expected to be similar as normal seasonal
 volume softening is offset by ongoing progress in growth and operational
 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 and alumina. The
 increase of $70 million compared to the second quarter of 2006 as well as
 the increase of $140 million over the prior quarter mainly reflect higher
 share-based compensation, the loss on the sale of the Company's Vlissingen
 smelter in the Netherlands and advisory and legal fees resulting from the
 Company's efforts during the quarter to develop a full set of highest value
 alternatives consistent with the best interests of Alcan shareholders
 following the May 7, 2007 Alcoa offer.
     Depreciation and amortization expenses were $11 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 $8 million lower
 than in the year-ago quarter and comparable to the prior quarter. The
 year-over-year decline mainly reflected a higher level of capitalized
 interest and reduced debt levels. In the second quarter of 2007,
 capitalized interest was $24 million compared to $20 million a year ago and
 $23 million in the first quarter, all largely related to the Gove
 expansion.
     The Company's effective tax rate on income from continuing operations
 was 29% in the second quarter and 31% year to date. Foreign currency
 balance sheet translation losses due to the strengthening of the Canadian
 dollar increased the effective tax rate in the second quarter, largely
 offset by the recognition of future tax benefits in France which were not
 previously recognized. These tax benefits, which are included in OSIs, were
 recognized in the second quarter when their realization met the relevant
 tests for likelihood of recovery.
     OUTLOOK
     -------
     For 2007, world primary aluminum consumption is forecast to increase by
 approximately 10.1% (6.9% in 2006) driven by exceptionally high demand in
 China and representing the fastest rate of global consumption increase
 since at least 1980. Production from new capacity and restarts is expected
 to increase world supply by about 11.2% (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.
     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.
                                                                 In       $ /
                                              Increase in  millions    common
                                             rate / 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(x)
       Aluminum                                    $100/t       190      0.51
     -------------------------------------------------------------------------
     (x) 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" (Operating earnings) is
 presented in addition to income from continuing operations and reported net
 income. Operating earnings 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, July 31, 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, engineered solutions 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, posted revenues of US$23.6
 billion in 2006. The Company has featured on the Dow Jones Sustainability
 World Index. For more information, please visit: www.alcan.com.
                                  ALCAN INC.
                                  ----------
 
     INTERIM CONSOLIDATED STATEMENT OF INCOME (unaudited)
     -------------------------------------------------------------------------
 
                                           Second Quarter        Six Months
                                        --------------------------------------
     Periods ended June 30                 2007      2006      2007      2006
                                        --------------------------------------
                                        --------------------------------------
     (in millions of US$, except per
      share amounts)
 
     Sales and operating revenues         6,605     6,103    13,025    11,653
 
     Costs and expenses
     Cost of sales and operating
      expenses, excluding depreciation
      and amortization noted below        4,998     4,646     9,799     8,774
     Depreciation and amortization          269       258       533       509
     Selling, administrative and general
      expenses                              453       366       827       730
     Research and development expenses       61        55       115       107
     Interest                                61        69       121       145
     Restructuring charges - net             26        94        38       108
     Other expenses (income) - net          155         2       152       (29)
                                        --------------------------------------
                                          6,023     5,490    11,585    10,344
                                        --------------------------------------
     Income from continuing operations
      before income taxes and other
      items                                 582       613     1,440     1,309
     Income taxes                           166       195       446       464
                                        --------------------------------------
     Income from continuing operations
      before other items                    416       418       994       845
     Equity income                           24        37        36        65
     Minority interests                      (2)       (1)       (2)       (2)
                                        --------------------------------------
     Income from continuing operations      438       454     1,028       908
     Income from discontinued operations      -         1         1         4
                                        --------------------------------------
     Income before cumulative effect of
      accounting change                     438       455     1,029       912
     Cumulative effect of accounting
      change, net of income taxes of
      $2 in 2006                              -         -         -        (4)
                                        --------------------------------------
     Net income                             438       455     1,029       908
     Dividends on preference shares           3         3         6         5
                                        --------------------------------------
     Net income attributable to common
      shareholders                          435       452     1,023       903
                                        --------------------------------------
                                        --------------------------------------
     Earnings per share
     Basic:
     Income from continuing operations     1.18      1.21      2.78      2.42
     Income from discontinued operations      -         -         -      0.01
     Cumulative effect of accounting
      change                                  -         -         -     (0.01)
                                        --------------------------------------
     Net income per common share - basic   1.18      1.21      2.78      2.42
                                        --------------------------------------
                                        --------------------------------------
     Diluted:
     Income from continuing operations     1.17      1.20      2.77      2.41
     Income from discontinued operations      -         -         -      0.01
     Cumulative effect of accounting
      change                                  -         -         -     (0.01)
                                        --------------------------------------
     Net income per common share -
      diluted                              1.17      1.20      2.77      2.41
                                        --------------------------------------
                                        --------------------------------------
     Dividends per common share            0.20      0.15      0.40      0.30
                                        --------------------------------------
                                        --------------------------------------
 
 
                                  ALCAN INC.
                                  ----------
 
     INTERIM CONSOLIDATED BALANCE SHEET (unaudited)
     -------------------------------------------------------------------------
 
                                                               June  December
                                                           30, 2007  31, 2006
                                                         ---------------------
                                                         ---------------------
     (in millions of US$)
 
     ASSETS
     ------
 
     Current assets
     Cash and time deposits                                     198       229
     Trade receivables (net of allowances of $65 in 2007
      and $58 in 2006)                                        3,254     2,910
     Other receivables and deferred charges                   1,242     1,195
     Deferred income taxes                                      132       152
     Inventories                                              3,258     3,186
     Current assets held for sale                                 4         5
                                                         ---------------------
     Total current assets                                     8,088     7,677
                                                         ---------------------
 
     Deferred charges and other assets                        1,001     1,087
     Investments                                              1,404     1,509
     Deferred income taxes                                    1,285       989
     Property, plant and equipment
       Cost (excluding construction work in progress)        19,106    18,698
       Construction work in progress                          2,706     2,294
       Accumulated depreciation                              (9,031)   (8,592)
                                                         ---------------------
                                                             12,781    12,400
                                                         ---------------------
     Intangible assets, net of accumulated amortization
      of $399 in 2007 and $346 in 2006                          628       676
     Goodwill                                                 4,387     4,599
     Long-term assets held for sale                               1         2
                                                         ---------------------
     Total assets                                            29,575    28,939
                                                         ---------------------
                                                         ---------------------
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     ------------------------------------
 
     Current liabilities
     Payables and accrued liabilities                         5,466     5,430
     Short-term borrowings                                      704       467
     Debt maturing within one year                               69        36
     Deferred income taxes                                       49        46
                                                         ---------------------
     Total current liabilities                                6,288     5,979
                                                         ---------------------
 
     Debt not maturing within one year                        4,578     5,476
     Deferred credits and other liabilities                   1,703     1,787
     Post-retirement benefits                                 3,330     3,381
     Deferred income taxes                                    1,219     1,151
     Minority interests                                          74        71
 
     Shareholders' equity
     Redeemable non-retractable preference shares               160       160
     Common shareholders' equity
       Common shares                                          6,453     6,235
       Additional paid-in capital                               634       672
       Retained earnings                                      5,132     4,281
       Common shares held by a subsidiary                       (31)      (31)
       Accumulated other comprehensive income (loss)             35      (223)
                                                         ---------------------
                                                             12,223    10,934
                                                         ---------------------
                                                             12,383    11,094
                                                         ---------------------
 
     Total liabilities and shareholders' equity              29,575    28,939
                                                         ---------------------
                                                         ---------------------
 
 
                                  ALCAN INC.
                                  ----------
 
     INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
     -------------------------------------------------------------------------
 
                                           Second Quarter        Six Months
                                        --------------------------------------
     Periods ended June 30                 2007      2006      2007      2006
                                        --------------------------------------
                                        --------------------------------------
     (in millions of US$)
 
     OPERATING ACTIVITIES
 
     Net income                             438       455     1,029       908
     Cumulative effect of accounting
      change                                  -         -         -         4
     Income from discontinued operations      -        (1)       (1)       (4)
                                        --------------------------------------
     Income from continuing operations      438       454     1,028       908
     Adjustments to determine cash from
      operating activities:
       Depreciation and amortization        269       258       533       509
       Deferred income taxes                (26)       83        41       227
       Equity loss (income), net of
        dividends                            43        (2)       51       (18)
       Asset impairment charges              18        36        19        45
       Loss (Gain) on disposal of
        businesses and investments - net     50        (4)       46        (4)
       Stock option expense                   9        11        11        36
       Change in operating working
        capital
         Change in receivables             (225)     (217)     (390)     (756)
         Change in inventories              (38)      (31)      (65)     (109)
         Change in payables and accrued
          liabilities                        82       110       (59)      130
       Change in deferred charges and
        other assets, deferred credits
        and other liabilities, and
        post-retirement benefits - net      118        75       111       167
       Other - net                            -        (2)       (6)       (2)
                                        --------------------------------------
     Cash from operating activities in
      continuing operations                 738       771     1,320     1,133
     Cash from operating activities in
      discontinued operations                 -         8         -         8
                                        --------------------------------------
     Cash from operating activities         738       779     1,320     1,141
 
     FINANCING ACTIVITIES
 
     Proceeds from issuance of new
      debt - net of issuance costs            9       354        22       371
     Debt repayments                       (416)     (770)     (760)     (836)
     Short-term borrowings - net             (6)       36       102         -
     Common shares issued                   138        81       166       147
     Dividends - Alcan shareholders
                  (including preference)    (72)      (58)     (147)     (115)
               - Minority interests          (1)        -        (1)       (1)
                                        --------------------------------------
     Cash used for financing activities    (348)     (357)     (618)     (434)
 
     INVESTMENT ACTIVITIES
 
     Purchase of property, plant and
      equipment                            (421)     (469)     (733)     (895)
     Business acquisitions and purchase
      of investments, net of cash and
      time deposits acquired                (12)       (2)      (14)      (40)
     Net proceeds from disposal of
      businesses, investments and other
      assets                                 50         9        57       207
     Other                                    2        12       (47)       12
                                        --------------------------------------
     Cash used for investment activities
      in continuing operations             (381)     (450)     (737)     (716)
     Cash from investment activities in
      discontinued operations                 -         5         -         5
                                        --------------------------------------
     Cash used for investment activities   (381)     (445)     (737)     (711)
 
     Effect of exchange rate changes on
      cash and time deposits                  3         2         4         5
                                        --------------------------------------
     Increase (Decrease) in cash and
      time deposits                          12       (21)      (31)        1
 
     Cash and time deposits - beginning
      of period                             186       203       229       181
                                        --------------------------------------
     Cash and time deposits - end of
      period                                198       182       198       182
                                        --------------------------------------
                                        --------------------------------------
 
 
                                  ALCAN INC.
                                  ----------
                (in millions of US$, except per share amounts)
 
     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 2006 year-end balance sheet data was derived from
 audited annual consolidated financial statements, but does not include all
 disclosures required by accounting principles generally accepted in the
 United States of America (US GAAP). 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 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 (FASB) Interpretation # 48, Accounting for
 Uncertainty in Income Taxes - an interpretation of FASB Statement # 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 included in Deferred charges and other
 assets.
     3. CAPITALIZATION OF INTEREST COSTS
     Total interest costs in continuing operations in the second quarter and
 six months ended June 30, 2007 were $85 and $168 respectively (2006: $89
 and $179), of which $24 and $47, respectively (2006: $20 and $34), were
 capitalized.
     4. SALES AND ACQUISITIONS OF BUSINESSES AND INVESTMENTS
 
     Investment
     ----------
     On April 30, 2007, the Company signed a Heads of Agreement with Saudi
 Arabian mining company Ma'aden to develop a proposed US$7-billion
 integrated aluminum "mine-to-metal" project. The Company would hold a 49%
 stake in the project and recorded an initial investment of $18 in the
 second quarter of 2007.
     Sales
     -----
     On April 27, 2007, the Company concluded the sale of selected assets at
 the Company's Affimet aluminum recycling plant in Compiegne (France). In
 relation to this, the Company received proceeds of $26 and recorded a loss
 on disposal of $12 in the second quarter of 2007.
     On May 31, 2007, the Company reached an agreement in principle with
 UK-based Klesch & Company Limited (Klesch) regarding the sale of its
 Vlissingen smelter in the Netherlands. Alcan had an 85% interest in the
 smelter. The Company recorded charges of $42 included as a loss on disposal
 of businesses and investments within Other expenses (income) - net in the
 second quarter of 2007. The sale was concluded on July 2, 2007, for net
 proceeds of $29.
     On June 26, 2007, the Company concluded the sale of its Satma
 subsidiary to ALMECO Spa for net proceeds of $4 and the Company recorded a
 loss on disposal of $1 in the second quarter and $2 in the six months ended
 June 30, 2007. 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.
     5. SUBSEQUENT EVENTS
     On July 12, 2007, Alcan entered into a support agreement with Rio Tinto
 plc (Rio Tinto) and Rio Tinto Canada Holding Inc. (Rio Tinto Canada), a
 wholly-owned indirect subsidiary of Rio Tinto. Pursuant to the support
 agreement, Rio Tinto Canada has agreed to make a cash tender offer to
 acquire all of Alcan's outstanding common shares for $101 per common share.
 The board of directors of Alcan has unanimously recommended that Alcan
 shareholders should accept the offer. The offer is subject to a number of
 conditions including valid acceptances of not less than 66 ? percent of
 Alcan shares on a fully diluted basis and the approval of Rio Tinto
 shareholders. The board of directors of Rio Tinto has approved and will
 recommend the transaction to its shareholders. The offer will also be
 subject to certain customary conditions including receipt of necessary
 regulatory and antitrust approvals, including in the United States, Canada,
 the European Union and Australia, and the absence of material adverse
 changes or effects. The offer is expected to close in the fourth quarter of
 2007.
     Subject to the terms and conditions of the support agreement, Alcan's
 board of directors has the right to withdraw, modify or change its support
 of the offer if Alcan receives a superior proposal (as defined in the
 support agreement) prior to the expiration of the offer. However, Rio Tinto
 Canada has the right to match any such superior proposal received by Alcan
 and, in certain circumstances, if the offer is not consummated, Rio Tinto
 Canada would have the right to receive a payment of $1,049 from Alcan. In
 other circumstances, related to the required shareholder votes for the Rio
 Tinto group, an equivalent payment from Rio Tinto may be required.
     The Company concurrently announced that Rio Tinto and Alcan had agreed
 to divest Alcan's packaging business. The Company is currently evaluating
 its strategies for the planned divestiture.
     On July 18, 2007 the Company announced it had reached an agreement with
 Hindalco Industries Limited, India for the sale of its 45% interest in
 Utkal Alumina International Limited (Utkal). The Company had announced its
 intention to sell its interest in Utkal on April 12, 2007. The Company
 expects completion of the sale during the third quarter of 2007.
     On July 26, 2007 the Company's board of directors approved the
 redemption of its redeemable non-retractable preference shares at a price
 of CAN$25.00 per share. The transaction is expected to be completed on
 September 3, 2007.
     Montreal, Canada
     31 July 2007
 
     %B M %C 1,8 %D Second Quarter Results
 
 

SOURCE ALCAN - EN

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