Slide 1: 4th Quarter 2008 Analyst Conference
Exhibit 99.2 th 4 Quarter 2008 Analyst Conference [Alcoa logo] January 12, 2009
Slide 2: Forward Looking Statements
[Alcoa logo] Forward Looking Statements 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 actu
Slide 3: Chuck McLane, Executive Vice President and CFO
Chuck McLane [Alcoa logo] Executive Vice President and Chief Financial Officer
Slide 4: 4th Quarter 2008 Financial Overview
[Alcoa logo] 4th Quarter 2008 Financial Overview – Loss from continuing operations of $929m or $1.16 per share • Restructuring, impairment and other special items of $708m or $0.88 per share – Revenue of $5.7 billion, down 18% – Sequential metal price reduction of 35% – Significant market deteriorat
Slide 5: Sequential Income Statement
[Alcoa logo] Sequential Income Statement In Millions 3Q'08 4Q'08 Change Sales $6,970 $5,688 (18%) Cost of Goods Sold $5,648 $5,277 (7%) % of Sales 81.0% 92.8% 11.8 pts SG&A $275 $273 (1%) % of Sales 3.9% 4.8% 0.9 pts Restructuring and Other Charges $38 $863 nm Interest Expense $96 $125 30% Other Exp
Slide 6: Restructuring & Other Special Items
[Alcoa logo] Restructuring & Other Special Items After-Tax Earnings Income Statement Amount Per Share Classification Segment Loss from Continuing Operations ($929) ($1.16) Restructuring: Headcount ($97) ($0.12) Restructuring Corporate Global Foil (100) (0.13) Restructuring Corporate Europe Auto Stru
Slide 7: 2008 Tax Reconciliation – 4th Quarter & Full Year
[Alcoa logo] 2008 Tax Reconciliation – 4th Quarter & Full Year Minority After-Tax 4th Quarter 2008 Pre-Tax Tax $ Tax % Interest & M.I. Reported Effective Tax Rate ($1,167) ($238) 20.4% $0 ($929) Adjustments Restructuring ($863) ($226) 26.2% ($23) ($614) Non-Cash Tax on Repatriated Earnings 65 (65) A
Slide 8: 4Q vs. 3Q 2008 Earnings Bridge
[Alcoa logo] 4Q vs. 3Q 2008 Earnings Bridge Income From Continuing Operations Excluding Restructuring & Other Special Items $700 $191 $88 $600 $164 $500 $69 $400 $331 $339 $560 $300 $200 $100 $0 3Q08 Energy Currency Price/Mix Volume LME 4Q08 ($100) ($200) ($221) ($300) 4Q 2008 Other Special Items =
Slide 9: Alumina
[Alcoa logo] Alumina th th 4 Quarter Highlights 4 Quarter Business Conditions 4Q 07 3Q 08 4Q 08 16% lower realized pricing Production (kmt) 3,855 3,790 3,776 Point Comfort curtailment led to lower rd 3 Party Shipments (kmt) 2,030 2,010 2,123 production rd 3 Party Revenue ($ million) 688 805 722 Sequ
Slide 10: Refining Cost Overview
[Alcoa logo] Refining Cost Overview Composition of Refining Production Costs Input Cost Inventory flow Pricing convention Fuel oil 1 – 2 months Prior month Fuel Oil Natural gas 1 – 2 months Rolling 16 quarters 14% Conversion 36% Natural gas 15% Caustic soda 3 - 6 months Spot & semi- annual Bauxite 2
Slide 11: Primary Metals
[Alcoa logo] Primary Metals th th 4 Quarter Highlights 4 Quarter Business Conditions 4Q 07 3Q 08 4Q 08 Realized pricing down 28% sequentially Production (kmt) 959 1,011 971 rd LME-linked costs declining but on lagged 3 Party Shipments (kmt) 624 704 807 basis rd 3 Party Revenue ($ million) 1,597 2,12
Slide 12: Smelting Cost Overview
[Alcoa logo] Smelting Cost Overview Input Cost Inventory flow Pricing convention Alumina 1 – 2 months 2 – 3 month lags Power 1 – 2 months 40% LME linked – 3 month lag Carbon 1 - 2 months Spot & semi-annual Materials 1 - 2 months 1 – 3 month lag Several significant input costs lag average primary met
Slide 13: Flat-Rolled Products
[Alcoa logo] Flat-Rolled Products th ATOI ($ million) 4 Quarter Business Conditions 4Q 07 3Q 08 4Q 08 Sharp decline in demand as economic environment worsened Global Rolled Products, 44 60 (9) 11% lower shipments on top of a seasonally excl Russia & China weak 3Q Hard Alloy Extrusions 8 7 8 Non can
Slide 14: Downturn Evident in Flat-Rolled Products
[Alcoa logo] Downturn Evident in Flat-Rolled Products Global Rolling Demand Collapse Global Rolling Order Rates 2008 & 2007 2007 2008 • 2008 demand well below 2007 • No sign of seasonal up-lift • Dramatic deterioration in 4Q orders over the last 3 weeks Apr May Jun Jul Aug Sep Oct Nov Dec 14
Slide 15: Flat-Rolled Products Market Drivers
[Alcoa logo] Flat-Rolled Products Market Drivers Revenue Composition Sequential Revenue Change - 18% - 23% - 36% +7% - 26% - 37% - 11% Total -17% 15
Slide 16: Engineered Products and Solutions
[Alcoa logo] Engineered Products and Solutions th th 4 Quarter Highlights 4 Quarter Business Conditions 4Q 07 3Q 08 4Q 08 Market declines adversely affected all businesses Third Party Revenue 1,311 1,451 1,258 Boeing strike ($5 million effect) & seasonal impacts resulted in lower aerospace demand AT
Slide 17: Record earnings despite market headwinds
[Alcoa Record earnings despite market headwinds logo] Engineered Products & Solutions Financial Metrics Sales (in billions) ATOI (in millions) Return on Capital 16% 7% $5.6 23% $503 $5.3 $409 2007 2008 2007 2008 2007 2008 Strong market positions Productivity improvements Cost efficient capacity in a
Slide 18: Cash Flow Statement
[Alcoa logo] Cash Flow Statement In Millions 4Q'07 3Q'08 4Q'08 Net Income $632 $268 $(1,191) DD&A 312 311 292 Change in Working Capital 385 (552) 590 Other Adjustments (661) 298 955 Pension Contributions (25) (418) (38) Cash From Operating Activities $643 $(93) $608 Dividends to Shareholders $(143)
Slide 19: Capital Expenditures
[Alcoa logo] Capital Expenditures Capital Expenditure History 2009 Capital Expenditures Forecast $4,000 150% $1,500 Values $ Millions Values $ Millions 71% $3,500 $3,000 100% $1,000 876 $2,500 29% $2,000 50% $500 187 $1,500 393 328 $1,000 0% $0 FY06 FY07 FY08 FY09 2009 First Half 2009 Second Half To
Slide 20: Liquidity Remains Strong
[Alcoa logo] Liquidity Remains Strong Added revolver amid financial market crisis Good performance in difficult CP markets Values $ Billions 5.2 % of Period Issuance with Maturity One Week or Greater 96% 87% 3.3 3.3 3.3 59% 43% 33% 34% 1.5 1.5 1.2 1.2 1Q 08 2Q 08 3Q 08 4Q 08 October November Decembe
Slide 21: Cash Conservation Efforts
[Alcoa logo] Cash Conservation Efforts Wide-Ranging Actions Taken 21
Slide 22: Klaus Kleinfeld, President and Chief Executive Officer
[Alcoa Klaus Kleinfeld logo] President and Chief Executive Officer
Slide 23: Accomplishments: Clear strategy, speed & execution
[Alcoa logo] Accomplishments: Clear strategy, speed & execution 2008 Accomplishments Three Strategic Priorities Secured long-term power contracts for nearly half of smelting system Profitable Growth Alcoa Advantage Completed successful start-up of in every business creating value for all businesses
Slide 24: Historic collapse in metal price – (56%) over 5 months
[Alcoa logo] Historic collapse in metal price – (56%) over 5 months 1 LME cash price/ton, in US$ and global inventory , in days 50 $3,500 45 40 $3,000 35 30 $2,500 25 - 56% 20 $2,000 15 10 $1,500 5 0 $1,000 1 Reported Stocks : Comex, IAI, Japan Port , LME, & SME Reported Stocks, LME Cash Price Days
Slide 25: Expect global demand decline of 2% in 2009
[Alcoa logo] Expect global demand decline of 2% in 2009 Primary Aluminum Consumption Growth Rates, 2009, in million mt Brazil 0.9 1% 5% 1.0 -2% 3% CIS Asia w/o China 4.9 -4% -2% North America 5.3 -12% -10% Global Demand Growth Rates: Europe 7.0 -9% -7% 2008: -3% 2009: -2% China 13.1 3% 9% 2009 Proje
Slide 26: Curtailment announcements – 13% of global output
[Alcoa logo] Curtailment announcements – 13% of global output 1 Global Smelting Curtailment Announcements By Month By Region Region Aug 08 Announced Percentage Production¹ Curtailment¹ Curtailed 679 5,020 920 China 14,000 (3,000) 21% 840 North America 5,700 (840) 15% 1,139 Eastern 4,650 (574) 12% Eu
Slide 27: 2009 – Aluminum Surplus or Deficit?
[Alcoa logo] 2009 – Aluminum Surplus or Deficit? Aluminum Supply / Demand Balance (in kmt) 2008 Production 38,800 2008 Consumption 37,000 Estimated 2009 600 Lower 2009 consumption (800) incremental production (2%) Announced curtailments (3,500) Stimulus effects ?? Total 2009 Production 35,900 Total
Slide 28: Managing downturn along the three strategic priorities
[Alcoa logo] Managing downturn along the three strategic priorities Three Strategic Priorities and Downturn Management Accelerated Profitable Growth Alcoa Advantage R&D portfolio in every business creating value for technology moves (in & all businesses refocus out) – Talent Share growth Curtailment
Slide 29: Getting ahead of the curve
[Alcoa logo] Getting ahead of the curve Alcoa Downturn Actions: Timeline 2008/09 Alcoa Downturn Actions Jul 11 Sep 17 Sep 30 Oct 6 Oct 7 Oct 23 Nov 10 Dec 22 Jan 6, 2009 Downsized Suspended Curtailed Announced Reduced Curtailed Agreement Announced Power & Electrical 150,000 mt halting of production
Slide 30: Restructuring actions incorporate all improvement levers
[Alcoa logo] Restructuring actions incorporate all improvement levers Restructuring Announcement: Levers and Actions Restructuring Announcement – January 6, 2009 Cost & Portfolio Production Procurement Liquidity Initiatives Streamlining Curtailments Efficiencies Swap of Sapa stake Initiate smelting
Slide 31: Gaining upstream strength through cash-free swap
[Alcoa logo] Gaining upstream strength through cash-free swap Portfolio Streamlining: Sapa / Elkem Swap Equity Swap Sapa JV Elkem Aluminium Alcoa Orkla Alcoa Orkla Current Current 45.45% 54.55% 50% 50% Ownership Ownership (operator) (operator) Sapa JV Elkem Aluminium Soft Alloy Extrusions Norway Sme
Slide 32: Smelting curtailments taken to maximize cash position
[Alcoa logo] Smelting curtailments taken to maximize cash position Smelting Production Curtailments: Tiered Approach Smelting Curtailment Steps Guiding Principle Full curtailment of Maximize cash position selected plant(s) for ramp down and ramp up, considering: Targeted smaller curtailments at seve
Slide 33: Increase labor and materials productivity
[Alcoa logo] Increase labor and materials productivity Cost & Procurement Efficiencies: Initiatives Labor Initiatives Procurement Initiatives •Supply chain management Headcount reductions Utilizing Alcoa’s global presence and logistics expertise, demonstrate Alumina & Primary 2,300 ability to employ
Slide 34: Decreased capital spending and increased debt capacity
[Alcoa logo] Decreased capital spending and increased debt capacity Liquidity Initiatives: Results Capital Spending ($ millions) Debt Maturities ($ millions) $1,600 $4,000 $1,400 99% of LT Debt $3,500 -50% maturities $3,000 $1,200 beyond 2009 nd $2,500 2 $1,000 $2,000 half $800 $0.5b $1,500 $600 st
Slide 35: Reaping substantial benefits
[Alcoa logo] Reaping substantial benefits Restructuring Announcement: Benefits of Actions Restructuring Announcement – January 6, 2009 Cost & Portfolio Production Procurement Liquidity Initiatives Streamlining Curtailments Efficiencies Benefits of Actions • 25% lower cost per ton in refining & smelt
Slide 36: Aluminum prospects remain bright
[Alcoa logo] Aluminum prospects remain bright Aluminum Outlook Aluminum Benefits Mega Trends Aluminum Demand (million mt) 1 Demographics 70 Global population Light • 2006: 6.6 billion 6% CAGR Weight Relative • 2025: 7.9 billion Price • 2050: 9.1 billion High Strength Urbanization 37 Recyclable Popul
Slide 37: Alcoa is well-positioned for the future
[Alcoa logo] Alcoa is well-positioned for the future Alcoa’s Competitive & Power Position World class refining system World leading businesses Refining Cost Position Bauxite Mining #1 Refining #1 Worst Smelting Capacity #1 … … End & Tab Can Sheet #1 … … Can Body Stock #2 Alcoa 30th … Aerospace Sheet
Slide 38: For Additional Information, Contact: Greg Aschman
[Alcoa logo] For Additional Information, Contact: Greg Aschman Director, Investor Relations Alcoa 390 Park Avenue New York, N.Y. 10022-4608 Telephone: (212) 836-2674 Facsimile: (212) 836-2813 www.alcoa.com 38
Slide 39: [Alcoa logo]
[Alcoa logo] [Alcoa logo] 39
Slide 40: Appendix
[Alcoa logo] [Alcoa logo] APPENDIX 40
Slide 41: Reconciliation of Return on Capital
[Alcoa logo] Reconciliation of Return on Capital Bloomberg Return on Capital, Bloomberg Return on Capital (1) Excluding Growth Investments (1) Year ended Year ended December 31, December 31, 2008 2008 Net income (loss) $ (74) Net income(loss) $ (74) Minority interests 221 Minority interests 221 Inte
Slide 42: Reconciliation of Adjusted Income
[Alcoa logo] Reconciliation of Adjusted Income (in millions) Quarter ended September 30, December 31, 2008* 2008 Net income (loss) $ 268 $ (1,191) Loss from discontinued operations (38 ) (262) Income (loss) from continuing operations 306 (929) Restructuring and other charges 25 614 Other special ite
Slide 43: Reconciliation of ATOI to Consolidated Net Income
[Alcoa logo] Reconciliation of ATOI to Consolidated Net Income (in millions) 4Q07 2007 1Q08 2Q08 3Q08 4Q08 2008 Total segment ATOI $ 519 $ 3,162 $ 668 $ 838 $ 665 $ 28 $ 2,199 Unallocated amounts (net of tax): Impact of LIFO 9 (24) (31) (44) (5) 73 (7) Interest income 10 40 9 12 10 4 35 Interest exp