Slide 1: Third Quarter 2007 Analyst Conference
Exhibit 99.2 October 9, 2007 Quarter 2007 Analyst Conference rd
Slide 2: Forward Looking Statements
2 Today’s discussion may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Alcoa’s actual results or actions may differ mater
Slide 3: Chairman and Chief Executive Officer Alain J.P. Belda
Chairman and Chief Executive Officer Alain J.P. Belda
Slide 4: Third Quarter 2007 Portfolio Management
4 rd Quarter 2007 Portfolio Management – Monetized Chalco investment – Increased the share repurchase program from 10% up to 25% – Committed to moving forward with the Packaging and Auto Castings businesses sale process
Slide 5: Chalco Investment Monetized
5 Chalco Investment Monetized 1,000 1,500 2,000 2,500 Date Alcoa Shares Investment ($M) 12/12/01 828.2 146.5 1/11/02 840.2 2.1 1/6/04 884.2 31.9 Total Investment ($M) 180.5 Investment Performance Alcoa’s Chalco Position Total Annualized Total Shareholder Return 1050% 44% Price Appreciation 989% 42%
Slide 6: Global Days of Consumption
6 Source: IAI and LME Global Days of Consumption
Slide 7: Primary Aluminum Consumption Growth Rates
7 Primary Aluminum Consumption Growth Rates Source: Alcoa analysis
Slide 8: China Aluminum Balance
8 China Aluminum Balance Source: China State Statistics Bureau
Slide 9: Supply / Demand Projections
9 Source: Alcoa analysis Supply / Demand Projections
Slide 10: End Market Conditions: Aerospace, Automotive, Construction
Aerospace Delivery rates remain high and expected tg remain strong through 2010 2007 orders coming in stronger than anticipated De-stocking of distributor inventories to persist through 1008 Tommercial Transportation Automotive Persistent weakness in North America as credit crunch stifles discretion
Slide 11: Strategic Initiatives Update
11 Strategic Initiatives Update
Slide 12: ROC
ROC Cash from Operations Volume/Mix/Productivity EBITDA Margins Exceed cost of capital Exceed capital expenditures Exceed cost inflation Exceed 2006 in every downstream segment
Slide 13: Executive Vice President and Chief Financial Officer Charles D. McLane
Executive Vice President and Chief Financial Officer Charles D. McLane
Slide 14: Third Quarter 2007 Financial Overview
14 rd Quarter 2007 Financial Overview – Income from continuing operations of $558m or $0.64 per share – Revenues of $7.4b – Cash from operations of $592m – Debt-to-cap at 29% – Trailing four quarters ROC of 11.8% – Chalco share sale and portfolio restructuring
Slide 15: Third Quarter vs. Second Quarter Comparison
15 nd Quarter vs. 3 rd Quarter Comparison Please see slide 19 and 39 for a reconciliation of income from continuing operations excluding restructuring and transaction costs for the third and second quarters of 2007, respectively.
Slide 16: Third Quarter 2007 Financial Overview
16 rd Quarter 2007 Financial Overview $ In Millions 2Q'07 3Q'07 Change Sales $8,066 $7,387 ($679) Cost of Goods Sold $6,178 $5,910 ($268) % of Sales 76.6% 80.0% 3.4 pts. SG&A $367 $365 ($2) % of Sales 4.5% 4.9% 0.4 pts. Restructuring and Other Charges ($57) $577 $634 Interest Expense $86 $151 $65 Ot
Slide 17: Third Quarter 2007 Financial Overview: Non-GAAP Income
17 Income from continuing operations – excluding restructuring and other charges and transaction costs is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews the operating results of Alcoa excluding the impacts of restructuring an
Slide 18: 3rd Quarter Tax Rate Reconciliation
18 3rd Quarter Tax Rate Reconciliation
Slide 19: Alumina
19 3Q’07 2Q’07 3Q’06 1,937 1,990 2,205 Party Shipments (kmt) 3,775 3,799 3,890 Production (kmt) Party Revenue ($MM) ATOI ($MM) Hurricane Dean impact at Jamalco Higher energy costs Unfavorable currency 2Q technology royalty not repeated Alumina rd Quarter Highlights th Quarter Outlook Prices to follo
Slide 20: Primary Metals
20 rd Quarter Highlights ATOI ($MM) 2,734 2,879 2,620 Party Price ($/MT) 1,600 1,746 1,476 Party Revenue ($MM) 3Q’07 2Q’07 3Q’06 Party Shipments (kmt) Production (kmt) Primary Metals th Quarter Outlook rd Quarter Business Conditions Lower realized pricing sequentially Tennessee and Rockdale curtailm
Slide 21: Flat-Rolled Products
21 Seasonality impact Distributor de-stocking Bohai pre-operating costs Flat-Rolled Products rd Quarter Highlights th Quarter Outlook rd Quarter Business Conditions Continued short-term impact of distributor de-stocking Continued weakness in the North American and European distribution market $0 $20
Slide 22: Engineered Solutions
22 (7) (5) (2) Other (8) 2Q’07 Total Investment Castings, Forgings, Fasteners AFL, Auto Castings and Structures (9) 3Q’06 (35) 3Q’07 Negative impact of seasonality Statutory tax rate change and costs related to the restructuring in AFL Continued productivity improvement in the Investment Castings an
Slide 23: Extruded and End Products
23 (7) Soft Alloy Joint Venture and Other 3Q’07 2Q’07 3Q’06 Total Global Hard Alloy Extrusions, Building & Construction Systems and Russia Soft Alloy joint venture depreciation re- started Seasonality in the Soft Alloy joint venture Commercial building and construction market remained strong Extrude
Slide 24: Packaging and Consumer
24 (2) (2) Other (1) 2Q’07 Total Reynolds Food Packaging and Flexible Packaging Closure Systems and Consumer Products (4) 3Q’06 3Q’07 Packaging and Consumer ATOI ($MM) rd Quarter Business Conditions th Quarter Outlook Normal seasonal decrease in Closures Normal seasonal increase in Consumer Products
Slide 25: Third Quarter 2007 Cash Flow Review
25 rd Quarter 2007 Cash Flow Review $ In Millions 3Q'06 3Q'07 Net Income $537 $555 DD&A Change in Working Capital Other Adjustments (302) Pension Contributions (242) (206) Cash From Operating Activities Dividends to Shareholders (130) (150) Change in Debt (494) Dividends to Minority Interests (81) (
Slide 26: Share Repurchase Program
26 Share Repurchase Program Based on 870M Shares Outstanding As of January 19, 2007 5% repurchased as of 3Q’07 15% additional authorized – 10% repurchase program authorized January 2007 – ~43M shares repurchased through 3Q’07 – Authorization for increase of repurchase program to 25% Timeline 5% rema
Slide 27: For Additional Information, Contact: Tony Thene
27 Tony Thene Director, Investor Relations Alcoa 390 Park Avenue New York, N.Y. 10022-4608 Telephone: (212) 836-2674 Facsimile: (212) 836-2813 www.alcoa.com For Additional Information, Contact:
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Slide 29: Appendix
29 APPENDIX
Slide 30: Reconciliation of ATOI to Consolidated Net Income
30 (1) Certain amounts for the first and second quarter of 2006 have been reclassified to Other so that this line reflects only the impact of LIFO. Presenting the Impact of LIFO as a separate line in the Reconciliation of ATOI started in the third quarter of 2006. Financial information for the first
Slide 31: Reconciliation of Return on Capital
31 Return on Capital (ROC) is presented based on Bloomberg Methodology which calculates ROC based on trailing four quarters. Reconciliation of Return on Capital 3Q'07 2Q'07 1Q'07 4Q'06 3Q'06 2Q'06 1Q'06 4Q'05 3Q'05 2Q'05 1Q'05 Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Blo
Slide 32: Reconciliation of Adjusted Return on Capital
32 Return on capital, excluding growth investments is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because it provides greater insight with respect to the underlying operating performance of the company’s productive assets. The company has significan
Slide 33: Reconciliation of EBITDA Margin
33 Reconciliation of EBITDA Margin Year ended December 31, Ninemonths ended September30, Year ended December 31, Ninemonths ended September30, Year ended December 31, Ninemonths ended September30, Flat - Rolled Products Extruded and End Products Engineered Solutions After-tax operating income (ATOI)
Slide 34: Reconciliation of EBITDA Margin – P&C
34 Reconciliation of EBITDA Margin – P&C Year ended December 31, Nine months ended September 30, Packaging and Consumer: After-tax operating income (ATOI) (1) $ 95 $ 92 Add: Income taxes Less: Other income and (expenses), net (2) Net margin Add: Depreciation, depletion, and amortization Earnings bef
Slide 35: Days of Working Capital
35 45.3 43.1 47.7 Days of Working Capital $ 7,387 $ 8,066 $ 7,631 Sales $ 3,638 $ 3,819 $ 3,956 Working Capital 2,649 2,388 2,209 Less: Accounts payable, trade 3,311 3,216 3,363 Add: Inventories $ 2,976 $ 2,991 $ 2,802 Receivables from customers, less allowances September 30, June 30, 2007 (a) Septe
Slide 36: Reconciliation of Income, excluding Restructuring Charges & Transaction Costs
36 Reconciliation of Income, excluding Restructuring Charges & Transaction Costs Income from continuing operations – excluding restructuring and other charges and transaction costs is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management re