Slide 1: 4th Quarter 2005 Analyst Conference
Exhibit 99.2 [Alcoa logo] 4th Quarter 2005 Analyst Conference January 9, 2006
Slide 2: Forward-Looking Statements
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 actual results or
Slide 3: Joseph Muscari, Chief Financial Officer
[Alcoa logo] Joseph Muscari Executive Vice President Chief Financial Officer
Slide 4: 4Q Summary
4Q Summary Business Fundamentals Continued strong aluminum demand Tight aluminum markets driving LME prices Strength in aerospace and commercial vehicle markets Seasonal weakness in automotive, B&C and can sheet High raw material and energy costs 4Q Financial Performance Total revenues up 2% to $6.7
Slide 5: 4th Quarter Market Conditions
4th Quarter Market Conditions Revenue by Market 4Q’05 Revenue Changes by Market Primary Packaging 4Q'04 3Q'05 Products 24% 3rd Party Realized Prices 28% Alumina 12% 6% Aluminum 12% 11% Aerospace 3rd Party Revenue Industrial 11% Products Aerospace 25% 7% 4% Other Automotive 0% 1% Automotive (Distr.,
Slide 6: Safety
Safety Zero Incident Locations Lost Work Days Total Recordables # of Locations 82% # of Locations 56% 400 351 400 44% 350 350 300 300 250 238 250 200 18% 200 190 150 150 100 77 100 50 50 0 0 NoLWD LWD NoTRR T RR 428 Locations 129,000 Employees
Slide 7: Growth
Growth Upstream First production from Alumar smelter expansion Guinea alumina refinery MOU signed Rockdale power station LOI signed Juruti bauxite mine environmental license granted Downstream Bohai JV formed with Alcoa management Began construction of new coating line for Architectural products Ini
Slide 8: Product Development
Product Development Simultaneous multi alloy casting – construction started on pilot facility in Amorebieta Hurricane impact resistant aluminum composite building panel DuraBright in other commercial vehicle components A range of fasteners that are applicable to composite structures have been develo
Slide 9: Operational Excellence
Operational Excellence Davenport 220" hot mill had record production in the 4th quarter New annual production records where set in 6 of our 9 refineries Australian refining system had record production in the 4th quarter. AFL operational issues improving Brazil FRP production records
Slide 10: Portfolio Management
Portfolio Management Completed sale of Southern Graphic Systems Eastalco smelter curtailed Reorganized Extrusion Businesses Hard Alloy, Rod & Bar: Linked to Mill Products to better serve aerospace and industrial markets Soft Alloy: Global organization with new leader to leverage best practices and e
Slide 11: 4th Quarter Financial Overview
4th Quarter Financial Overview Financial Income from continuing operations of $210 million, or $0.24 per share, includes items totaling negative $93 million, or $0.11 per share Cash from operations in the quarter of $1 billion Debt-to-cap reduced to 30.8% Revenue up 12% year over year and 2% sequent
Slide 12: 4th Quarter 2005 Financial Review
4th Quarter 2005 Financial Review In Millions 3Q'05 4Q'05 Fav/(Unfav) Sales $6,566 $6,669 $103 Cost of Goods Sold $5,405 $5,459 ($54) % of Sales 82.3% 81.9% 0.4 pts SG&A $317 $362 ($45) % of Sales 4.8% 5.4% (0.6 pts) Restructuring and Other Charges $7 $27 ($20) Interest Expense $96 $78 $18 Other Inc
Slide 13: 4th Quarter 2005 Significant Items
4th Quarter 2005 Significant Items Item Net after-tax impact Hurricanes & Business interruptions $55 million Mark-to-Market $22 million Restructuring $19 million Russia $14 million Power and other credits ($17 million) Total $93 million
Slide 14: 4th Quarter 2005 Cash Flow Review
4th Quarter 2005 Cash Flow Review $ In Millions 3Q'05 4Q'05 Capital Expenditures Net Income 289 224 $762* $800 DD&A 322 317 $542* $600 Change in Working Capital 240 479 Other Adjustments 6 38 $400 Pension Contribution (364) (19) $200 Cash From Operating Activities 493 1,039 $0 Dividends to Sharehold
Slide 15: Revenue and ATOI Performance
Revenue and ATOI Performance Historical Performance of Combined Segments ($million) 800 7,500 600 5,000 400 2,500 200 0 0 ATOI Revenue Total ATOI is defined as sum of 3rd party and intersegment ATOI.
Slide 16: Alumina
Alumina 4Q Highlights Production & Cost Trends 4Q’05 3Q vs 4Q 4Q vs 4Q 3,800 160% 150% 3rd Party Sales ($MM) 561 6% 5% 3,700 140% ATOI ($MM) 183 17% 3% 3,600 130% 3,500 120% Production (kmt) 3,706 0% 2% 110% 3,400 3rd Party Shipmts (kmt) 1,966 (3%) (11%) 100% 3,300 90% 3rd Party Price $248 6% 12% 80
Slide 17: Primary Metals
Primary Metals 4Q Highlights Production & Cost Trends 4Q’05 3Q vs 4Q 4Q vs 4Q 920 150% 900 140% 3rd Party Sales ($MM) 1,281 6% 23% 880 130% ATOI ($MM) 242 44% 22% 120% 860 Production (kmt) 900 0% 9% 110% 840 100% 3rd Party Shipmts (kmt) 557 (6%) 16% 820 90% 3rd Party Price $2,177 11% 12% 800 80% 780
Slide 18: Flat Rolled Products
Flat Rolled Products 4Q Highlights 4th Quarter Dynamics $MM 3Q vs 4Q 4Q vs 4Q Aerospace markets remain strong Revenue 1,739 4% 16% Seasonal volume declines in can ATOI (incl. Russia) 62 (23%) 5% sheet and automotive Natural gas and chemical coating costs higher on hurricane impact ATOI Performance R
Slide 19: Extruded & End Products
Extruded & End Products 4Q Highlights 4th Quarter Dynamics $MM 3Q vs 4Q 4Q vs 4Q Hard alloy extrusions benefit from Revenue 1,022 (6%) 5% aerospace demand ATOI (incl. Russia) (3) (113%) (50%) Steep seasonal volume declines in soft alloy, and building and construction ATOI Performance Higher energy c
Slide 20: Engineered Solutions
Engineered Solutions 4Q Highlights 4th Quarter Dynamics $MM 3Q vs 4Q 4Q vs 4Q Fasteners and investment castings Revenue 1,275 2% 10% remain strong on robust aerospace ATOI (incl. Russia) 45 41% 10% demand Improving performance at AFL Seasonal volume declines in ATOI Performance automotive $ Millions
Slide 21: Packaging & Consumer
Packaging & Consumer 4Q Highlights 4th Quarter Dynamics $MM 3Q vs 4Q 4Q vs 4Q Resin cost increases outpace Revenue 798 (1%) 4% ability to pass through on ATOI 20 (29%) (33%) hurricane related shortages 4th quarter peak season for Alcoa Consumer Products ATOI Performance Seasonal declines in Closures
Slide 22: Outlook Summary
Outlook Summary 1Q‘06 Outlook Positives Negatives Continued strong aluminum Seasonal declines in consumer demand products and building and construction Aluminum prices strengthened to fifteen year highs Aerospace markets are strong Continued operating improvement Continued progress on growth project
Slide 23: Alain J. P. Belda, Chairman and CEO
[Alcoa logo] Alain J. P. Belda Chairman and Chief Executive Officer
Slide 24: 2005 Review
2005 Review Revenue growth of 13%, or $2.9 billion, over 2004 Income from continuing operations of $1.2 billion Maintained debt-to-cap within target range (30.8% at year-end) ROC excluding growth investments of 9.5% Mitigated significant cost inflation through price, mix and productivity Executed on
Slide 25: 2005 Cost Pressures & Management Actions
2005 Cost Pressures & Management Actions Income from Continuing Operations ($ millions) External Cost Management Actions Pressures 126 141 124 50 34 69 $1,500 410 188 $1,377 433 $1,233 425 $1,000 234 80 $630 $500
Slide 26: Fundamentally Strong Franchise
Fundamentally Strong Franchise Debt to Total Capital 45% (%) 40% 35% 30% Target Range (25-35%) 25% 20% 1 0% Return on Capital* 9% (%) 8% 7% 6% 5% 4% 3% 2% 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 * Bloomberg trailing 12 month average Excludes growth investments (CWIP and Russia) for 2003 through 2005
Slide 27: Industry Costs Continue to Escalate
Industry Costs Continue to Escalate Worldwide Aluminum Smelter Cash Costs 2003 - 2005 $ per MT 2400 2200 2000 2005 Cost Curve 1800 1600 2004 Cost Curve 1400 2003 Cost Curve 1200 1000 800 Data : Alcoa, CRU International 600 0 5000 10000 15000 20000 25000 30000 35000 Worldwide Production - 000 MT
Slide 28: Upstream Production and Labor Productivity
Upstream Production and Labor Productivity Alumina Production Improvement - Alcoa Smelting Production Improvement Share Indexed to 2001 Indexed to 2001 (Continuously Operating Smelters) 1.06 1.03 1.03 1.04 1.14 1.17 1.0 1.10 1.04 1.0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Excludes Badin,
Slide 29: 2005 Downstream Segment Highlights
2005 Downstream Segment Highlights Engineered Solutions Alcoa Investment Cast and Forged Products—Sales up 16% YOY on strong aerospace demand and market position on key aerospace and IGT programs; operating margin expansion of 26% driven by productivity improvements Fasteners—Sales increased by 10%
Slide 30: Strong Consumption Growth
Strong Consumption Growth Projected 2020 World Aluminum Al Consumption vs GDP Per Capita Consumption Al Cons (M Tons) (kg/cap) 0.6 1.7 60.6 60 60 5.0 1.9 Canada 10.8 1.1 Germany 3.1 Korea 4.1 50 50 USA Taiwan 11.6 6.7 29.5 Japan 40 40 4.4 Australia Italy 31.6 7.2 Sweden 30 30 France 18.5 Venezuela 2
Slide 31: Upstream Growth Projects
Upstream Growth Projects Refining 5000 4000 Jamalco Alumar 3000 Pinjarra 2000 1000 0 Project Year 2005 2006 2007 2008 2009 + Smelting 800 Trinidad 600 Iceland Alumar 400 200 0 11
Slide 32: Downstream Growth Projects—Flat Rolled Products
Downstream Growth Projects—Flat Rolled Products 700 Bohai 600 Other 500 Russia 400 300 200 100 0 2005 2006 2007 2008 2009+ Other includes: Davenport, Kitts Green, Kofem, Shanghai
Slide 33: Strategically Managing the Portfolio
Strategically Managing the Portfolio Divested/Restructured Acquired/Invested Smelting Refining HAW Suriname Eastalco Pinjarra Elkem Equity Energy Three Oaks mine, Friendsville mine Aluminum Downstream US hydro, Latin America hydro Automotive Castings Warrick power plant Cast Auto Wheels Non-aluminum
Slide 34: Priorities in 2006
Priorities in 2006 Managerial Excellence Focus on volume (creep and productivity) and cost via ABS, centralized purchasing, consolidation, LCC Increase overhead productivity while managing overhead expenses through EBS and low-cost country sourcing Focus on product mix, pricing and new product appli
Slide 35: For Additional Information, Contact:
For Additional Information, Contact: 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
Slide 36: Appendix
[Alcoa logo] Appendix
Slide 37: Reconciliation of Return on Capital
Reconciliation of Return on Capital FY05 FY04 FY03 Bloomberg Bloomberg Bloomberg In Millions Method Method Method Net Income $1,233 $1,310 $938 Minority Interest $259 $242 $238 Interest Expense $261 $201 $238 (After-tax) Numerator (Sum Total) $1,753 $1,753 $1,414 Average Balances (1) ST Borrowings $
Slide 38: Reconciliation of Adjusted Return on Capital
Reconciliation of Adjusted Return on Capital FY05 FY04 FY03 Bloomberg Bloomberg Bloomberg In Millions Method Method Method Numerator (Sum Total) $1,753 $1,753 $1,414 Russia Net Income Impact $69 $0 $0 Adjusted Net Income $1,822 $1,753 $1,414 Average Balances (1) ST Borrowings $1,112 $767 $345 LT Bor
Slide 39: Segment ATOI Reconciliation
Segment ATOI Reconciliation In Millions 4Q'05 4Q'04 Flat Rolled Products ATOI excluding Russia losses $82 $59 Russia losses $20 NA Segment ATOI $62 $59 Extrusions and End Products ATOI excluding Russia losses ($2) ($2) Russia losses ($1) NA Segment ATOI ($3) ($2) Engineered Solutions ATOI excluding