SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

Commission file number 1-3677

ALCAN INC.

(Exact name of registrant as specified in its charter)

****CANADA
Inapplicable
(State or Other Jurisdiction of
(I.R.S. Employer Identification No.)
Incorporation or Organization) 

**1188 Sherbrooke Street West, Montreal, Quebec, Canada H3A 3G2**
(Address of Principal Executive Offices and Postal Code)
**(514) 848-8000**
(Registrant's Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes XNo ____
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 ofthe Exchange Act).

Yes XNo ____

At March 31, 2003, the registrant had 321,642,094 shares of common stock (without nominal or par value) outstanding.

**TABLE OF CONTENTS**

PART I - FINANCIALINFORMATION

Item 1. Financial Statements

NOTES TO INTERIMCONSOLIDATED FINANCIAL STATEMENTS

Item 2. Management's Discussion and Analysis of Financial Conditions and Resultsof Operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item1.   Legal Proceedings

Items 2. through 5.

Item 6 (a) - Exhibits

Item 6 (b) - Report on Form 8-K

SIGNATURE

CERTIFICATION
**PART I - FINANCIAL INFORMATION**
In this report, all dollar amounts are stated in U.S. dollars and all quantities in metric tons, or tonnes, unless indicated otherwise.  A tonne is 1,000 kilograms, or 2,204.6 pounds.  The word "Company" refers to Alcan Inc. and, where applicable, one or more consolidated subsidiaries.
**Item 1. Financial Statements

ALCAN INC.**INTERIM CONSOLIDATED STATEMENT OF INCOME
(unaudited)
**Three months ended March 31***(in millions of US$, except per*share amounts)***2003 
2002**Sales and operating revenues**3,273
2,937**Costs and expenses
Cost of salesand operating expenses**2,585
2,331
Depreciationand amortization**231
205
Selling,administrative and general expenses**165
139
Research anddevelopment expenses**29
28
Interest(note 11)**49
50
Restructuring, impairment and other special charges (note 5)**2
14
Otherexpenses - net**57
7**3,118
2,774
Income before income taxes and other items**155
163
Income taxes(note 8)**141
78
Income before other items**14
85
Equity income**-
1
Minority interests**(1)
-**Net income**13
86
Dividends on preference shares**2
1**Net income attributable to common shareholders**11
85**Net income per common share - basic and diluted(note 3)**0.04
0.26**Dividends per common share**0.15
0.15*The accompanying notes are an integral part of the interim financial statements.*
2
****ALCAN INC.******
INTERIM CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(unaudited)  **Three months ended March 31*(in millions of US$)***2003
2002 
 
 **Retained earnings - beginning of year - as reported**3,503
4,074**Accounting change - Impairment of goodwill
 
 **   as at January 1, 2002 (note 2)**-
(748)**As restated**3,503
3,326
Net income**13
86
Dividends
 
 
**-**  Common**(48)
(48)
**-**  Preference**(2)
(1)**Retained earnings - end of period**3,466
3,363*The accompanying notes are an integral part of the interim financial statements.*
3
****ALCAN INC.*** ***INTERIM CONSOLIDATED BALANCE SHEET**
(unaudited for 2003)*(in millions of US$)**March 31, 2003
December 31,2002 **ASSETS**Current assets
Cash and time deposits**111
110
Trade receivables
    (net of allowances of $57 in 2003 and $59 in 2002)**1,437
1,300
Other receivables**476
553
Inventories
**-**   Aluminum operating segments
      ** .** Aluminum**946
905
      ** .** Rawmaterials**376
390
       **.** Othersupplies**292
296**1,614
1,591
-   Packaging operating segment**409
396**2,023
1,987**4,047
3,950   
Deferred charges and other assets**645
667
Property,plant and equipment
**-**   Cost (excluding Construction work in progress)**17,891
17,798
**-**   Construction work in progress**615
573
**-**   Accumulated depreciation**(8,367)
(8,138)**10,139
10,233
Intangible assets, net of accumulated amortization of $63 in   2003 and $56 in 2002**329
332
Goodwill**2,357
2,356**Total assets**17,517
17,538*The accompanying notes are an integral part of the interim financial statements.*
4
****ALCAN INC.
*** ***INTERIM CONSOLIDATED BALANCE SHEET (cont'd)**
(unaudited for 2003)*(in millions of US$)**March 31, 2003
December 31, 2002 **LIABILITIES AND SHAREHOLDERS' EQUITY**Current liabilities
Payables and accrued liabilities**2,360
2,337
Short-term borrowings**352
385
Debt maturing within one year**334
295**3,046
3,017
Debt not maturing within one year**3,105
3,187
Deferred credits and other liabilities**1,454
1,419
Deferred income taxes**1,166
1,140
Minority interests**135
150**Shareholders' equity
Redeemable non-retractable preference shares**160
160
Common shareholders' equity
**- **  Common shares**4,708
4,703
**-**   Retained earnings**3,466
3,503
**- **  Deferred translation adjustments**277
259**8,451
8,465**8,611
8,625
Commitments and contingencies (note 10)**Total liabilities and shareholders' equity**17,517
17,538*The accompanying notes are an integral part of the interim financial statements.*
5
****ALCAN INC.**
 
**INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS**
(unaudited)**Three months ended March 31*(in millions of US$)* **2003
2002**OPERATING ACTIVITIES
Net income**13
86
Adjustments to determine cash from operating activities:
Depreciation and amortization**231
205
Deferred income taxes**24**      3
Change in operating working capital:
-  Change in receivables**(43)
6
-  Change in inventories**(23)**      32
-  Change in payables**15
(92)
-  Total change in operating working capital**(51)
(54)
Change in deferred charges, other assets, deferred credits     and other liabilities - net**72**      24
Other - net**5**      (6)**Cash from operating activities**294**      258*The accompanying notes are an integral part of the interim financial statements.*
6
****ALCAN INC.
****INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (cont'd)**
(unaudited)**Three months ended March 31 *(in millions of US$)* **2003
2002**FINANCING ACTIVITIES
New debt**3
131
Debt repayments**(85)
(171)**(82)
(40)
Short-term borrowings - net**(26)
(127)
Common shares issued**5
6
Dividends
 · Alcan shareholders (including preference)**(50)
(49)
 · Minority interests**(9)
(1)**Cash used for financing activities**(162)
(211)**INVESTMENT ACTIVITIES
Property, plant and equipment**(134)
(107)
Business acquisitions**(5)
-**(139)
(107)
Net proceeds from disposal of businesses, investments and   other assets**7
36**Cash used for investment activities**(132)
(71)
Effect of exchange rate changes on cash and time deposits**1
1**Increase (decrease) in cash and time deposits**1
(23)
Cash and time deposits - beginning of period**110
119
Cash and time deposits - end of period**111
96*The accompanying notes are an integral part of the interim financial statements.*
7
**
**ALCAN INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2003

(Unaudited)

*(in millions of US$, except per share amounts)*

 

**1.       ACCOUNTING POLICIES
The unaudited interim consolidated financial statements are based upon accounting policies and methods of their application consistent with those used and described in the Company's annual financial statements, except for the recently adopted accounting policies described below.  The interim financial statements do not include all of the financial statement disclosures included in the annual financial statements prepared in accordance with Canadian generally accepted accounting principles (GAAP) and therefore should be read in conjunction with the most recent annual financial statements.**Recently Adopted Accounting Policies
Impairment of Long-lived Assets
On January 1, 2003, the Company prospectively adopted  the Canadian Institute of Chartered Accountants (CICA)section 3063, Impairment of Long-lived Assets.  Under this standard, an impairment loss is recognized when the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.  No significant impairment losses for long-lived assets were recorded in the first quarter of 2003.
Disposal of Long-lived Assets and Discontinued Operations
On January 1, 2003, the Company prospectively adopted  the CICAsection 3475, Disposal of Long-lived Assets and Discontinued Operations.  Under this standard, a long-lived asset to be disposed of by sale is measured at the lower of its carrying amount or fair value less cost to sell and is not amortized while classified as held for sale.  For a long-lived asset to be disposed of other than by sale, such as by abandonment, before the end of its previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over its shortened useful life.  Also, the standard requires that the results of operations of a component of an enterprise that has been disposed of either by sale or abandonmentbe reported as discontinued operations.  A component of an enterprise comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the enterprise. There were no disposalactivities relating to long-lived assets initiated by the Company in the first quarter of 2003.
8**1.       ACCOUNTING POLICIES (cont'd)
Guarantees
On January 1, 2003, the Company adopted the CICA accounting guideline AcG-14, disclosure of guarantees,   which  addresses  disclosure  requirements for  a guarantor  that  issues a  guarantee.   See note 10 - Commitments and contingencies.**Recently Issued Accounting Policies
Asset Retirement Obligations
The CICA issued section 3110, AssetRetirement Obligations, which will be effective for the Company's fiscal year beginning on January 1, 2004.  Thisstandard establishes accounting standards for the recognition, measurement and disclosure of liabilities and the associated asset retirement cost for legal obligations associated with the retirement of a tangible long-lived asset. Under this standard, a liability would generally be recognized for such an obligation at its fair value when incurred and a corresponding asset retirement cost would be added to the carrying amount of the related asset.**2.       ACCOUNTING CHANGE
Goodwill and Other Intangible Assets
On January 1, 2002, the Company adopted the CICA standard concerning goodwill and other intangible assets.  Under this standard, goodwill and other intangible assets with an indefinite life are no longer amortized but are carried at the lower of carrying value and fair value.  Goodwill and other intangible assets with an indefinite life are tested for impairment on an annual basis.  An impairment of $748 was identified in the goodwill balance as at January 1, 2002, and was charged to opening retained earnings in 2002 upon adoption of the accounting standard.  Any further impairment arising subsequent to January 1, 2002, will be taken as a charge against income.  As a result of the new standard, the Company no longer amortizes goodwill.
9

**3.       NET INCOME PER COMMON SHARE - BASIC AND DILUTED**

Basic and diluted net income per common share arebased on the weighted average number of shares outstanding during the period.The treasury stock method for calculating the dilutive impact of stock optionsis used. The following table outlines the calculation of basic and diluted netincome per common share.

 
** 
Three months ended March 31 **2003
2002
**Numerator for basic and diluted net income per  common share:**
Net income attributable to common shareholders**11
85
**Denominator**(number of common shares in millions):
Denominatorfor basic net income per common
share - weighted average of outstanding shares**322
321
Effect of dilutive stock options**-
2
Denominatorfor diluted net income per common
share - adjusted weighted average of outstanding shares**322
323
**Net income per common share - basic and diluted****0.04
0.26
 
In the first quarter, options to purchase 6,231,283 common shares (2002: 353,000) at a weighted average price of CAN$48.79 per share (2002: CAN$64.25) were outstanding during the period but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average price of the common shares.

As at March 31, 2003, there were 321,642,094 (2002 : 321,104,209) common shares outstanding.

 
**4.       DIFFERENCES BETWEEN CANADIAN AND UNITED STATES**
**GENERALLY ACCEPTED ACCOUNTING****PRINCIPLES**
** **Differences relate principally to accounting for foreign currency translation, derivatives, post-retirement benefits, "available-for-sale" securities, asset retirement obligations and goodwill impairment identified as at January 1, 2002.  Refer to the Company's 2002 Annual Report for an explanation of these differences.
On January 1, 2003, the Company adopted, in certain circumstances, the optional hedge accounting provisions contained in the FASB Statements Nos. 133 and 138, Accounting for Derivative Instruments and Hedging Activities.  If certain conditions are met, a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows of a forecasted transaction, or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation, an unrecognized firm commitment, an available-for-sale security, or a foreign-currency denominated forecasted transaction. Under this statement, when the Company elects to apply hedge accounting, it is required to establish at the inception of the hedge the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge.  Those methods must be consistent with the Company's approach to managing risk.
10**4.       ****DIFFERENCES    BETWEEN CANADIAN AND UNITED STATES**
**GENERALLY ACCEPTED ACCOUNTING****PRINCIPLES********(cont'd)**
Recently Adopted Accounting Standards

On January 1, 2003, the Company adopted the FASBStatement No. 143, Accounting for Asset Retirement Obligations. This statementestablishes accounting standards for the recognition, measurement and disclosureof liabilities for legal obligations associated with the retirement of atangible long-lived asset that result from its acquisition, construction,development or normal operation. Under this standard, a liability is generallyrecognized for such an obligation at its fair value when incurred and acorresponding asset retirement cost is added to the carrying amount of therelated asset. In subsequent periods, the carrying amount of the liability isadjusted to reflect the passage of time and any changes in the timing or amountof the underlying future cash flows. The asset retirement cost is amortized toexpense over the asset's useful life.

Under the FASB Statement No. 143, theCompany recognized, for U.S. GAAP reporting only, additional liabilities, atfair value, of approximately $106 as at January 1, 2003, for existing legalasset retirement obligations. Such liabilities are adjusted for accretion costs.The related asset retirement costs are capitalized as increases to the carryingamount of the associated long-lived assets and accumulated depreciation on thesecapitalized costs recognized. These liabilities consist primarily ofenvironmental remediation costs, resulting from normal operations, associatedwith certain bauxite residue disposal sites at its alumina refineries and thedisposal of certain of its spent potlining associated with smelter facilities.

As a result of the new standard, asat January 1, 2003, Property, plant and equipment - cost has been increased by$140, Property, plant and equipment - accumulated depreciation has beenincreased by $90, Deferred credits and other liabilities have been increased by$106, Deferred income taxes have been reduced by $17 and an after-tax charge of $39recorded in Net income for the cumulative effect of accounting change. Thecumulative effect of accounting change related primarily to costs for spent potlining disposal for pots currently in operation. Net income for the yearended December 31, 2002 would not have been materially different if thisstandard had been adopted effective January 1, 2002. For the three months endedMarch 31, 2003, net income was reduced by $10 due to the adoption of thestandard, resulting principally from higher balance sheet translation exchangelosses of $8 relating to Deferred credits and other liabilities.

The following is a reconciliation of the aggregate carrying amount of liabilities for asset retirement obligations and the pro forma impact for the year ended December 31, 2002, as if the standard had been adopted effective January 1, 2002.
  
(pro forma)
    For the period ended
    March 31, 2003
    December 31, 2002
 
  
    Balance - beginning of period
    389
    363
    Liabilities incurred
3
    12
    Liabilities settled
    (4)
    (12)
    Accretion expense
5
    17
    Exchange
    27
9
    Balance - end of period
    420
    389   
On January 1, 2003, the Company prospectively adopted the FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities.  This standard requires that a liability associated with an exit or disposal activity be recognized when the liability is incurred rather than at the date of the Company's commitment to an exit plan.
11**4.       ****DIFFERENCES    BETWEEN CANADIAN AND UNITED STATES**
**GENERALLY ACCEPTED ACCOUNTING****PRINCIPLES****(cont'd)**
Recently Adopted Accounting Standards (cont'd)

On January 1, 2003, the Company adopted the recognition and measurementprovisions of the FASB Interpretation No. 45, Guarantor's Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees ofIndebtedness of Others. The provisions are applied on a prospective basis toguarantees issued or modified after December 31, 2002. There were no significantguarantees issued or modified after December 31, 2002.

Recently Issued Accounting Standards

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, which applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which the Company holds a variable interest that it acquired before February 1, 2003.  This Interpretation requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved.  An entity that holds a significant variable interest but is not the primary beneficiary is subject to specific disclosure requirements.  The Company is studying this Interpretation and has not yet determined its impact.
 
Reconciliation of Canadian and U.S. GAAP
 *Three months ended March 31
(in millions of US$, except per*share amounts)***2003
2002

Net income - as reported
**13**
86

Difference due to:
- Valuation of derivatives**16
99
- Asset retirement obligations**(11)
-
- Deferred tax effect on the above**(4)
(32)

Net income from continuing operations before
  cumulative effect of accounting changes - U.S. GAAP**14
153

Cumulative effect of accounting changes- net of taxes
- Impairment of goodwill**-
(748)
- Asset retirement obligations**(39)
-
**Loss - U.S. GAAP**(25)
(595)

Dividends on preference shares**2
1

Loss attributable to common
  shareholders - U.S. GAAP**(27)
(596)
**Loss per common share**  - basic and diluted - U.S. GAAP**(0.08)
(1.86)

Net income attributable to common shareholders
  from continuing operations before cumulative effect of
  accounting changes - U.S GAAP**12
152
**Net income from continuing operations before**  cumulative effect of accounting changes per common**  share - basic and diluted - U.S. GAAP**0.04
0.47
12
**4.       ****DIFFERENCES    BETWEEN CANADIAN AND UNITED STATES**
**GENERALLY ACCEPTED ACCOUNTING****PRINCIPLES****(cont'd)**
 
Reconciliation of Canadian and U.S. GAAP (cont'd)**March 31, 2003
December 31, 2002**As reported**U.S. GAAP
As reported
U.S. GAAP
Other receivables**476**485
553 
553

Inventories**2,023**2,028
1,987 
1,983

Deferred charges and other assets**645**650
667 
664

Property, plant and equipment
- Cost (excluding Construction work in progress)**17,891**18,031
17,798
17,798  
- Accumulated depreciation**(8,367)**(8,458)
(8,138)
(8,138)  

Intangible assets, net of accumulated amortization**329**472
332
475

Payables and accrued liabilities**2,360**2,361
2,337
2,354

Deferred credits and other liabilities**1,454**2,187
1,419
2,029

Deferred income taxes**1,166
**1,001**
1,140
983

Retained earnings**3,466      **3,462      
3,503      
3,537      

Deferred translation adjustments**277      **223      
259      
205       
  
First Quarter**Comprehensive income (loss)**2003
2002

Loss**(25)
(595)

Net change in deferred translation adjustments**18
8

Net change in excess of market
  value over book value of  "available-for-sale" securities**2
4

Valuation of derivatives**13
-
**Comprehensive income (loss)
**8**
(583)
**Accumulated other comprehensive loss**
**March 31,
2003
December 31,
2002

Deferred translation adjustments**223      
205      

Minimum pension liability**(320)     
(320)     

Unrealized gain on "available-for-sale" securities**8      
6      

Valuation of derivatives**13      
-      
**Accumulated other comprehensive loss**(76)     
(109)     
13**5.       RESTRUCTURING, IMPAIRMENT AND OTHER SPECIAL CHARGES
In 2001, the Company implemented a restructuring program aimed at safeguarding its competitiveness, resulting in a series of plant sales, closures and divestments throughout the organization.
Restructuring and asset impairment charges
A schedule is provided below showing details of the provision balances and related cash payments for the restructuring and asset impairment charges relating to the 2001  restructuring program:**2001
Severance costs
Asset Impairment provisions
Other
Total
Charges
112
269
30
411
Cash payments - net
(7)
-
(7)
(14)
Non-cash charges
-
(269)
-
(269)
Provision balance as at December 31
105
-
23
128**2002
Charges
36
26
27
89
Cash payments - net
(64)
-
(1)
(65)
Non-cash charges
(6)
(26)
(7)
(39)
Provision balance as at December 31
71
-
42
113**2003
Charges
-
1
1
2
Cash payments - net
(15)
-
(15)
(30)
Non-cash charges
-
(1)
-
(1)
Provision balance as at March 31
56
-
28
84 
In the first quarter of 2003, the Company recorded charges of $1 pre-tax for asset write-downs (Engineered Products) and $1 pre-tax for other costs (Packaging).

In 2002, the Company recorded charges of $89 pre-tax related to the restructuring program, which consisted of severance costs of $36 related to workforce reductions of approximately 960 employees (Q1; nil, Q2; 300 employees, Q3; 320 employees, Q4; 340 employees), impairment of long-lived assets of $26 and other exit costs related to the shutdown of facilities of $27.  Severance charges of $36 (Q1; nil, Q2; 14, Q3; 6, Q4; 16) related primarily to the closure of the Burntisland facility, U.K. (Bauxite, Alumina and Specialty Chemicals, certain cable operations in North America (Engineered Products) and extrusion operations in Malaysia and light-gauge operations in Fairmont, West Virginia (Rolled Products Americas and Asia).  Asset impairment charges of $26 (Q1; 9, Q2; nil, Q3; 13, Q4; 4) related primarily to the extrusion operations in Pieve, Italy (Engineered Products) and the Borgofranco plant in Italy (Rolled Products Europe).  Other exit costs of $27 (Q1; 5, Q2; (3), Q3; (4), Q4; 29) consisted principally of closure costs of $19 for the Burntisland facility, U.K., a loss of $5 on the sale of the extrusion operations in Thailand that arose from the realization of deferred translation losses (Rolled Products Americas and Asia), a loss of $4 on the sale of the rolled products circles production unit at Pieve, Italy (Rolled Products Europe), other costs of $3 and was offset in part by income of $4 from the write-back of excess contract loss provisions upon settlement with a customer (Engineered Products).

14

**5.       RESTRUCTURING, IMPAIRMENT AND OTHER SPECIAL CHARGES (cont'd)**

In 2001, Restructuring, impairment and other special charges of $657 pre-tax were recorded, which included restructuring and asset impairment charges of $411 and other special charges of $246.  The charges of $411 included severance costs of $112, which related to workforce reductions of approximately 2,200 employees, impairment of long-lived assets of $269 and other exit costs related to the shutdown facilities of $30.  Other special charges of $246 related to environmental provisions for treatment costs of $150 for stored spent potlining in Canada as well as remediation costs of $96 forbauxite residue disposal sites in Canada and the U.K.

Workforce reductions relating to the 2001 restructuring program and subsequent terminations are as follows:
    
First Quarter  
2001
2002
2003
Total
Bauxite, Alumina and Specialty Chemicals
-
380
-
380
Primary Metal
500
-
-
500
Rolled Products Americas and Asia
200
250
-
450
Rolled Products Europe
400
-
-
400
Engineered Products
-
200
-
200
Packaging
800
130
-
930
Other
300
-
-
300
Planned workforce reductions
2,200
960
-
3,160
Terminations in period
400
2,500
135
3,035
Total remaining employees
  
 
 
125
 
In the context of the Company's objective of value maximization, a detailed business portfolio review was undertaken in 2001 to identify high cost operations, excess capacity and non-core products.  Impairment charges arose as a result of negative projected cash flows and recurring losses, and related principally to buildings, machinery and equipment and some previously capitalized project costs.

15
**5.       RESTRUCTURING, IMPAIRMENT AND OTHER SPECIAL CHARGES (cont'd)
 
Asset Impairment Provisions    
Assets Held and Used (1) 
Assets Held for Disposal (2) 
2001
2002
Q1-2003
Total 
    2001
  2002
Q1-2003
Total
Bauxite, Alumina and         
  Specialty Chemicals (3)
45   
-   
-    
45    
-   
-    
-    
-   
Primary Metal (4)
22   
-   
-    
22    
-   
-    
-    
-   
Rolled Products         
  Americas and Asia (7)
14   
3   
-    
17    
8   
-    
-    
8   
Rolled Products         
  Europe (5) (8)
79   
-   
-    
79    
22   
9    
-    
31   
Engineered Products
3   
13   
1    
17    
-   
-    
-    
-   
Packaging (6) (9)
43   
1   
-    
44    
12   
-    
-    
12   
Other
21   
-   
-    
21    
-   
-    
-    
-   
Total
227   
17   
1    
245    
42   
9    
-    
51   
 
(1)  An impairment provision was recorded to the extent that the net book value exceeded the fair value.
(2)  An impairment provision was recorded to the extent that the net book value exceeded the fair value less selling costs.
Assets Held and Used
(3)  Charges principally relate to the specialty chemicals plant at Burntisland, U.K.
(4)  Charges principally relate to the engineered cast products plant in Quebec, Canada.
(5)  Charges principally relate to the cold mill at the Rogerstone plant in the U.K.
(6)  Charges principally relate to the foil facilities at Glasgow, U.K.
Assets Held for Disposal
(7)  Charges principally relate to the extrusion operations in Malaysia and Thailand.
(8)  Charges principally relate to certain rolled products and recycling operations at the Pieve and Borgofranco plants in Italy.
(9)  Charges principally relate to the Pharmatech rubber stopper and aluminum seals operations in the U.S.
 
 
**Assets Held for Disposal
Rolled Products
Rolled Products   
Americas & AsiaEurope
Packaging
Total
Sales & Operating Revenues   
  First Quarter 2002
10
26
30
66
  First Quarter 2003
3
20
-
23
Net Operating Losses
 
 
 
 
  First Quarter 2002
-
-
(1)
(1)
  First Quarter 2003
-
-
-
-
Assets
 
 
 
 
  December 31, 2002
10
5
-
15
  March 31, 2003
9
4
-
13
Liabilities
 
 
 
 
  December 31, 2002
5
35
-
40
  March 31, 2003
5
19
-
24
16**5.      RESTRUCTURING, IMPAIRMENT AND OTHER SPECIAL CHARGES (cont'd)
In 2002, the Company completed the sale of certain glass packaging operations located in Park Hills, Missouri, and Mays Landing, Williamstown and Millville, New Jersey for proceeds of $15 equal to book value.  As well, the company sold its rolled product circles production unit at its Pieve plant in Italy for proceeds of $14 and its two Pharmatech rubber stopper and aluminum seals operations located in Salisbury, Maryland, U.S. for proceeds of $9 equal to book value.
The restructuring program was completed in 2002, with the exception of the closure of facilities at Glasgow, U.K., which is expected to be completed in mid-2003, the shut-down of one of the two cold mills at the Fairmont, West Virginia plant in thesecond half of 2003, and the sales of the extrusion operations in Malaysia and the recycling operations at the Borgofranco plant in Italy, which areplanned to be completed in 2003, as scheduled per the Company's plans.  The closure plans include the orderly shutdown of facilities after existing customer requirements have been satisfied and in some situations, the transfer of production operations to other facilities.  The provision balance of $84 at March 31, 2003 is expected to be largely paid out in 2003.**6.       INTERIM INFORMATION BY OPERATING SEGMENT
The following presents selected information by operating segment, viewed on a stand-alone basis.  The operating management structure is comprised of six operating segments; Bauxite, Alumina and Specialty Chemicals; Primary Metal; Rolled Products Americas and Asia; Rolled Products Europe; Engineered Products; and Packaging.  Transactions between operating segments are conducted on an arm's-length basis and reflect market prices.  Thus, earnings from the Primary Metal group represent mainly profit on metal produced by the Company, whether sold to third parties or used in the Company's Rolled Products, Engineered Products and Packaging groups.  Earnings from the Rolled Products, Engineered Products and Packaging groups represent only the fabricating profit on their respective products.  The accounting principles used to prepare the information by operating segment are the same as those used to prepare the consolidated financial statements of the Company except that the pension costs for the operating segments are based on the normal current service cost with all actuarial gains, losses and other adjustments being included in Intersegment and other.  Some corporate office and certain other costs have been allocated to the respective operating segments. The operating segments are described below.
Bauxite, Alumina and Specialty Chemicals
Headquartered in Montreal, Canada comprising the Company'sworldwide activities related to bauxite mining, alumina refining and theproduction of specialty chemicals. The Bauxite, Alumina and Specialty ChemicalsBusiness Group operates and/or owns seven bauxite mines and deposits in fivecountries and five alumina plants in three countries.

Primary Metal
Also headquartered in Montreal, comprising smelting operations, power generation and production of primary value-added ingot in the form of sheet ingot, extrusion billet, rod and foundry ingot, as well as engineering services and trading operations for alumina and aluminum,operating or having interests in 16 smelters in seven countries.
17**6.      INTERIM INFORMATION BY OPERATING SEGMENT (cont'd)
Rolled Products Americas and Asia
Headquartered in Cleveland, U.S.A. encompassing aluminumsheet and light gauge products, operating 16 plants in six countries.
Rolled Products Europe
Headquartered in Zurich, Switzerland comprising aluminumsheet, including automotive, can and lithographic sheet, plate and foil stockoperating 11 plants in four countries.
Engineered Products
Headquartered in Neuhausen,Switzerland producing fabricated aluminum products, including wire and cable,components for the mass transportation, automotive, building, display,electromechanical and other industrial markets, as well as sales and servicecentres throughout Europe, operating 47 plants in 17 countries.
Packaging
Headquartered in Zurich, consisting of the Company's worldwide food flexible, foil, specialty, pharmaceutical and cosmetics packaging businesses, operating 76 plants in 14 countries.
Intersegment and other
This classification includes the deferral or realization of profits on intersegment sales of aluminum and alumina as well as other non-operating items.
18
 
**6.       INTERIM INFORMATION BY OPERATING SEGMENT (cont'd)**Period ended March 31** 
Sales and operating revenues - intersegment
First Quarter
 **2003
2002
Bauxite, Alumina and Specialty Chemicals**201
187
Primary Metal**605
540
Rolled Products Americas and Asia**19
48
Rolled Products Europe**123
70
Engineered Products**2
6
Packaging**5
5
Intersegment and other**(955)
(856)
**-
-** 
Sales and operating revenues - third parties
First Quarter
 **2003
2002
Bauxite, Alumina and Specialty Chemicals**120
101
Primary Metal**586
561
Rolled Products Americas and Asia**843
782
Rolled Products Europe**509
411
Engineered Products**453
398
Packaging**752
674
Other**10
10
 **3,273
2,937** 
EBITDA
First Quarter
 **2003
2002
Bauxite, Alumina and Specialty Chemicals**54
64
Primary Metal**214
214
Rolled Products Americas and Asia**80
92
Rolled Products Europe**47
30
Engineering Products**23
27
Packaging**93
76
EBITDA from operating segments**511
503
Depreciation and amortization**(231)
(205)
Restructuring, impairment and other special charges**(2)
(14)
Intersegment,  corporate offices and other**(74)
(70)
Interest**(49)
(50)
Income taxes**(141)
(78)
Minority interests**(1)
-**Net income**13
86
19

**7.       STOCK OPTIONS AND OTHER STOCK-BASEDCOMPENSATION**

TheCompany does not recognize compensation expense in earnings for options grantedunder the share option plan for employees as stock options are granted at anexercise price equal to the market price of the underlying stock on the grantdate. For pro forma income purposes, the fair value of options granted is beingamortized over their respective vesting periods. Pro forma net income and netincome per common share - basic and diluted, as if the Company had elected torecognize compensation expense using the fair value method for all stock optionsis presented below:

Three months ended March 31

2003       
2002
Net income as    reported

13

86
Compensation expense if the fair value method was    used

2

6
Pro forma net income

11

80
Net income per common share - basic and diluted -    as reported
0.04

0.26
Pro forma net income per common share - basic and    diluted
0.03

0.23
Thecompensation cost for stock-based employee compensation awards that can besettled in cash, which is based on the change in the share price during theperiod, is recognized in income. For the first quarter of 2003 totalcompensation cost for such awards was $2 (2002: $3).
****8.       INCOME TAXES 
First Quarter**2003
2002
Current
**117 
75 
Deferred
**24 **
3  **141 **
78 
The composite of the applicable statutory corporate      income tax rates in Canada is 39.1% (39.4% for 2002). In 2003, the      difference between income taxes calculated at the Canadian composite rate      and the amounts reported is primarily attributable to exchange. In 2002,      the difference is primarily attributable to exchange and the impact of      potential future tax benefits that were not recognized since their      realization is not likely.

 

**9.       SUPPLEMENTARY INFORMATION**
****Statement of Cash Flows**
First Quarter**2003
2002
Interest paid
**57 
57 
Income taxes paid (recovered)
**34 
(47)
20
**10.    COMMITMENTS AND CONTINGENCIES**
In 1997, as part of the claim settlement arrangements  related to the British Columbia Government's cancellation of the Kemano  Completion Project, the Company obtained the right to transfer a portion of a  power supply contract with BC Hydro to a third party. The Company sold the  right to supply this portion to Enron Power Marketing Inc. (PMI), a subsidiary  of Enron Corporation (Enron) for cash consideration. In order to obtain the  consent of BC Hydro to this sale, the Company was required to retain residual  liability for EPMI's obligation arising from the supply contract, including in  the event that EPMI became unable to perform. This contingent liability is  subject to a maximum aggregate amount of $100, with mitigation and subrogation  rights. On December 2, 2001, EPMI and Enron filed for protection under Chapter  11 of the U.S. Bankruptcy Code. Powerex, the BC Hydro affiliate which now  holds the rights to the power supply contract, maintains that it has  terminated the power supply contract and as a result filed a claim for $100  against Enron on March 15, 2002 as a necessary step prior to making the same  claim against the Company. Enron did not respond to that claim and the Company  received, on March 22, 2002, a demand for payment in the amount of $100 from  Powerex. On January 17, 2003, the Company received a decision following  arbitration hearings held in December 2002, on a contractual dispute between  Powerex and Alcan. The arbitrator confirmed Powerex's claim for $100. A  standstill agreement, which had been in effect, has now expired. The parties  remain in discussions while taking steps to preserve their respective rights.  To this end, Alcan is pursuing an application before the courts of the State  of Oregon for the judicial review of the arbitrator's decision. Alcan has been  advised that Powerex cannot enforce the arbitrator's decision while this  application is pending. The judicial review is not expected to take place  before August 2003. A provision of $100 pre tax was recorded in the fourth quarter of  2002.

The Company has guaranteed the repayment of approximately  $6 of indebtedness by third parties. Alcan believes that none of these  guarantees is likely to be invoked. These guarantees are primarily for  employee housing loans and potential environmental remediation at former Alcan  sites.

Alcan, in the course of its operations, is subject to  environmental and other claims, lawsuits and contingencies. The Company has  environmental contingencies relating to approximately 29 existing and former  Alcan sites and third-party sites. Accruals have been made in specific  instances where it is probable that liabilities will be incurred and where  such liabilities can be reasonably estimated.

Although it is possible that liabilities may arise in other  instances for which no accruals have been made, the Company does not believe  that such an outcome will significantly impair its operations or have a  material adverse effect on its financial position.
**11.    CAPITALIZATION OF INTEREST COSTS

Total interest costs in the first quarter were $50 (2002:  $50) of which $1(2002: nil) was capitalized.

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**12.     PROPOSED ACQUISITIONS

Agreements to acquire Baltek Corporation

On March 5, 2003, the Company announced that it has entered  into agreements to acquire Baltek Corporation (Baltek) for approximately $35.  Under the agreements, the Company will acquire Baltek on the basis of $15.17  per share. This reflects a premium of approximately 77% based on the 20-day  average trading price to March 5, 2003. With corporate head offices in New  Jersey, Baltek, the world leader in balsa-based composite materials, has  production and sales facilities around the world. Baltek has operated balsa  plantations in Ecuador, one of the world's largest sources of balsa wood, for  nearly 60 years.

The transaction, which is subject to approval by Baltek's  shareholders, has received the approval of Baltek's board of directors and the  support of its major shareholders. Completion is subject to other usual  conditions for a transaction of this nature, although no clearances from  anti-trust or competition authorities are required. Alcan expects the  transaction to be completed in the second quarter of 2003.

Acquisition of VAW Packaging

On April 30, 2003 the Company completed the purchase of VAW  Packaging group of businesses (FlexPac) from Norsk Hydro for approximately  €345 million. FlexPac includes 14 plants in 8 countries and has 5,400  employees. FlexPac comprises a set of custom manufacturing businesses  producing high-quality flexible packaging products for a wide variety of  end-use customers and manufacturers' of consumer goods, including those in the  food, dairy and pharmaceutical industries. The purchase price is subject to  post-closing adjustments.

In the opinion of management, all adjustments necessary for afair presentation of interim period results have been included in the financialstatements. These interim results are not necessarily indicative of results forthe full year.

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**Item 2.  Management'sDiscussion and Analysis of Financial Conditions and Results of Operations.**
The Company reported first quarter net income of US$0.04 per share compared to US$0.26 per share a year earlier and US$0.08 per share in the fourth quarter of 2002. 

The results for the first quarter of 2003 included a non-cash, after-tax charge of US$96 million (US$0.30 per share) for the effects of foreign currency balance sheet translation in addition to Other Specified Items, after-tax, of US$13 million (US$0.04 per share) that comprised mainly tax adjustments relating to prior years.  Foreign currency balance sheet translation effects and Other Specified Items, after-tax, reduced earnings by US$21 million (US$0.07 per share) in the first quarter a year ago, and by US$98 million (US$0.30 per share) in the fourth quarter of 2002.

Certain terms used in this section are defined under"Definitions" below.
**Consolidated Review*** **FIRST***********************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************