Alcoa Inc. (AA), the world's biggest aluminum producer, said Monday its quarterly net profit slipped because of higher energy costs, a weaker dollar and a charge it took for divesting non-core businesses.

Pittsburgh-based Alcoa said net income was $268 million, or 30 cents a share, in the fourth quarter, compared with $291 million, or 33 cents a share, a year earlier. However, income from continuing operations rose to $345 million, or 39 cents per diluted share, up slightly from $342 million, or 39 cents, in the same quarter last year.

Fourth-quarter revenue rose 12 percent to $6.0 billion on soaring metal prices.

Analysts on average had expected earnings of 42 cents a share, according to Reuters Estimates.

"U.S. dollar weakness and higher input costs continue to pressure margins," Chairman and Chief Executive Alain Belda said in a statement. He said Alcoa would continue to cut costs and streamline operations.

Alcoa said it expects to spend about $2.5 billion on capital projects in 2005, aimed largely at the upstream businesses. The company finished a refinery expansion in Jamaica in 2004, and will complete brownfield projects this year at refineries in Suriname and Pinjarra, West Australia. The company also broke ground at its new Iceland smelter and for an expansion at the Alumar smelter (search) in northern Brazil last year.

In 2005, it will invest in a new anode plant in Norway, modernization of a Spanish smelter and improvements at the newly acquired fabricating facilities in Russia.

To take advantage of historically high aluminum prices, Alcoa said it made significant progress toward restarting several of its smelters. When complete, restarts will add 220,000 tonnes of production in 2005, leaving the company with idle capacity of 361,000 tonnes.

The fourth-quarter results include a $77 million charge for the company's plan to shed assets that include a small casting operation and its telecommunications businesses.

The largest portion of the charge relates to Alcoa's exit from the AFL telecommunications (search) business, which is being taken over by Japan's Fujikura Ltd (search).

In December, Lehman Brothers cut its fourth-quarter and 2005 earnings estimates for Alcoa, citing margin pressures from higher costs and a weaker dollar.

Lehman reduced its fourth-quarter earnings outlook for the aluminum maker to 42 cents a share from 50 cents and trimmed its 2005 profit forecast to $2.30 a share from $2.40.