Jan. 27 (Bloomberg) -- Alcan Inc., the world's second-largest aluminum producer, said it had $510 million to $560 million in fourth-quarter costs to restructure its packaging business and to shut two smelters in Europe.

The expenses will reduce per-share earnings by $1.40 to $1.50, Montreal-based Alcan said today in a statement. Alcan will report full results on Feb. 7.

Chief Executive Officer Travis Engen has been closing plants after profit from the packaging business fell 2 percent in the nine months ended December. The company plans to shut smelters in France and Switzerland because of escalating power costs. Excluding the costs, profit will rise ``strongly'' from $111 million a year earlier, Alcan said. The shares rose to a 13-month high.

``Investors tend to focus on a company's outlook, so cleaning up a problem is a good thing,'' said Victor Lazarovici, a BMO Nesbitt Burns analyst in New York. ``Assuming that the write-offs represent the accounting recognition of mistakes of the past, markets tend to discount that long before the accountants do.''

Non-cash asset writedowns will account for about 80 percent of the fourth-quarter costs, Alcan said. Severance payments to employees and other costs will make up the remainder.

Shares of Alcan shares rose 79 cents, or 1.5 percent, to C$52.87 at 4:10 p.m. on the Toronto Stock Exchange, the highest since December 2004. They have gained 8.9 percent in the past year.

Alcan is expected to report fourth-quarter earnings of 54 cents a share, the average estimate of 19 analysts surveyed by Thomson Financial. Thomson didn't provide the parameters of its survey.

Aluminum Prices Climb

Aluminum for delivery in three months rose as much as 2.3 percent to $2,526 a metric ton today on the London Metal Exchange, the highest since January 1989.

``Those rising prices are making investors happy,'' said Pierre Bernard, vice president of Canadian equities at Industrial Alliance Fund Management Inc. in Montreal, which runs assets of about $1.7 billion and holds Alcan stock. ``People are clamoring for metals producers like Alcan.''

Engen, the CEO, said today Alcan has finished integrating former French rival Pechiney SA. Alcan acquired Pechiney two years ago for about 4 billion euros ($4.8 billion).

``Today's write-offs are the tail end of the Pechiney merger,'' Lazarovici of BMO Nesbitt Burns said.

Alcan employs about 70,000 people worldwide. Pittsburgh-based Alcoa Inc. is the world's biggest aluminum producer.

To contact the reporter for this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.

Last Updated: January 27, 2006 16:13 EST