Slide 1: 1st Quarter 2003 Analyst Conference
1st Quarter 2003 Analyst Conference Alcoa Inc. April 23, 2003 New York, NY
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
Slide 3: Richard B. Kelson, Executive VP and CFO
1st Quarter 2003 Analyst Conference Richard B. Kelson Executive VP and CFO
Slide 4: 1st Quarter Highlights
REN 45¢ Quarter Highlights ¥ Continued improvement in safety ¥ Income from continuing operations $0.23 per diluted share up from $0.22 in the year ago quarter and a loss of $0.15 sequentially ¥ Revenue growth over both prior and year-ago quarters Y Gross margin expanded to 20.3%, despite higher ener
Slide 5: 1st Quarter Highlights
REN 45¢ Quarter Highlights ¥ Sequential profitability increases in all segments, except Packaging & Consumer, which was up year-over-year Y strong control on capital spending partially offset working capital increases ¥ cost savings of $52 million, closing the gap for the year-end $1.0 billion cost
Slide 6: Worldwide LWD Incident Rate
N Worldwide LWD Incident Rate =" SAFETY Met 2003 goal of 0.15 one year early (in 2002); currently halfway to 2005 milestone Rate (injuries per 200,000 hrs.) 12 Alcoa (as reported) mwith Reynolds, Howmet/Huck .99 012005 Milestone 10 0.81 os 077 075 0.46 9-49 9.46 0. 0.18 Bors] 0.15 | 0.11 9.075 oo fi
Slide 7: 1st Quarter 2003 Financial Overview
A] 1st Quarter 2003 Financial Overview in Millions 1903 4002 Faw/(Unfav) LME ($/tonne) $1,392 $1,358 $34 Sales $5,112 $5,061 $51 Cost of Goods Sold $4,073 $4,088 $15 ‘of Sales 79.7% 80.8% 11% SG&A $294 $339 $45 ‘of Sales 5.8% 6.7% 0.9% Minority Interests $59 ($2) ($61) GAAP Net Income (Loss) $151 ($
Slide 8: 1st Quarter Market Conditions
| 1st Quarter Market Conditions Global View =" MARKET CONDITIONS Change from Change from Packasiog E E 1902 4Q02 Realized Prices Alumina 13% 15% Primary 5% 8% seme 3rd Party Revenue Commercial Trans 14% 8% Automotive 18% 14% sasacays Industrial Products 14% 14% 1% BRC 8% 4% Aerospace * 22% = 44% IGT
Slide 9: Alumina & Chemicals
BQ Alumina & Chemicals Alignme! Bauxite mining, alumina refining and chemicals production Markets: ATOI Performance: Intersegment Revenue $ Millions LME cert mon -———sa.0% __ ue gg 64 80 34 Party 62 Revenue at 60 0 58 Current Business Con Positives Negatives Point Comfort digester #6 will add volume
Slide 10: Primary Metals
2 Primary Metals Alignment: 3.9 ion mt of smelting capacity, with 440 kmt currently idled Eee ATOI Performance: $Miliors 20 +16.1% tween Intersegment mz Revenue a 10 34 Party @ Revenue 0 fa a % 702 2080 108, Current Business Con Positives | Negatives Total shipments in-line with 1Q03 LME on a 30 day
Slide 11: Flat Rolled Products
mae Flat Rolled Products Alignment: Aluminum sheet and plate for aerospace applications, rigid container sheet for beverage cans and mill products Markets: Distribution & Other Packaging Building & Constructis Commercial Vehide jn A ero Auto Current Business Con Positives ATOI Performance: $ ition 6
Slide 12: Engineered Products
wae Engineered Products Fasteners & Howmet products Market: Distribution & Other Aero Commercial Vehide IeT Building & Construction Auto Current Business Con Positives Alignment: Hard and soft alloy extrusions, aluminum forgings, Alcoa ATOI Performance: $ ition % 0 26 60 Negatives Slight increase in
Slide 13: Packaging & Consumer
ma Packaging & Consumer Alignment: Reynolds packaging and consumer products, VEX and closures Markets: Consumer Products Institutional, Flex Packaging & Other Closures Current Business Conditions: Positives ATOI Performance: $ ition 489.3% 80 -17.2% i 60 eT 2 a 1902-20 a0 40 Negatives 1003 Seasonal
Slide 14: Other
am Other Alignment: Alcoa Fujikura, residential building products and automotive structures Markets: ATOI Performance: $Miliors Commercial “ 428.6%. Vehide Tele Building & Construction Auto Current Business Con jons: Positives Negatives Seasonal increases in residential No significant changes in bui
Slide 15: Capital Management
Capital Management Capital Expenditures 260 2003 target is $1B 240 220 & 200 % 180 § 160 140 if ol 100 + Q1 2001 1 2002 Q1 2003 Working Capital «Sequential quarter increases i receivables due to: inventory and -Higher revenues -Seasonal build in select businesses «Somewhat offset by increases in pay
Slide 16: Higher Energy Costs — Sequential
ALcoA| Quarter Higher Energy Costs — Sequential $75m increase in energy costs during the quarter Increase by Segment Primary Metals Flat Rolled Products Other/Corporate Packaging & ; Consumer Engineered Products Increase by Fuel Type Natural Gas Coal’ Other Electricity
Slide 17: 2002 Actions Reflected in 1Q Costs
2002 Actions Reflected in 1Q Costs Quarterly Run Rate in Millions of dollars | 250 fa | | o - O O oi | | 2000 1901 2901 aQo1 4Q01 1902 2Q02 3Q02 4Q0z 1903 2003 Goal Update Goal We expect to surpass the $1 billion Cost Challenge
Slide 18: Return on Capital
ALcoA| Return on Capital 24 20 16 2001 1002 = 2Q 0 3Q 02 4Q 02 |—*-Top Quintile S&P Industrials ~#- Alcoa ROC * Both indicators are based on the Bloomberg ROC Methodology 1Q 03
Slide 19: G. John Pizzey, Alcoa Primary Products
1st Quarter 2003 Analyst Conference G. John Pizzey Executive Vice-President, Alcoa Primary Products
Slide 20: Agenda
2. Agenda "Safety update =Cost improvements in North America "Growth throughout the system =Alumina and metal market update
Slide 21: Lost Workday Incident Rate
2. Lost Workday Incident Rate Rate (lost work days per 200,000 hrs.) 0.6 05 04 54 49 33 29 03 19 " iu 0+ 1997 1998 1999 2000 2001 2002 2003 ee Primary Products Group a
Slide 22: Strategic Repositioning
ALcoA| Strategic Repositioning = Improve existing capacity via ABS = Idle high cost capacity = Add new capacity ¢ Greenfields « Brownfields « Acquisitions
Slide 23: Growth/Cost Initiatives Update
wa Growth/Cost Initiatives Update Alumina = Future Expansion Opportunities — Jamaica (in progress) — Suriname — Australia Aluminum = Future Expansion Opportunities — Iceland — Brazil — Canada — Australia — Bahrain — China Average Alcoa Alumina Cost Index 100% 91% 87% 82% 1999 2002 ' 2005" 2008 Avera
Slide 24: Restructuring in the United States
2. Restructuring in the United States = Labor productivity gains realized throughout the US system = Smelting — $35 million (annual run rate) realized to date this year — On track to achieve $75 million in 2003 (annual run rate) e Massena St Lawrence — 110 people e Eastalco - 150 people e Rockdale —
Slide 25: Capacity Curtailments
A Capacity Curtailments = Massena — 60 kmt annualized — Avoid high cost interruptible power — Sell alumina into spot market = |ntalco — 100 kmt annualized (Alcoa share) — BPA power increase October 1, 2003 — Not economical at proposed BPA power prices
Slide 26: Smelting Capacity Expansions - Iceland
Smelting Capacity Expansions ALcoA| - Iceland = Greenfield smelter — 322 kmt capacity = Energy supplied by new hydro facility — To be built, owned and operated by Landsvirkjun ® Project cost - $1.1 billion = Timeline — 2005-2007
Slide 27: Smelting Capacity Expansions - Baie Comeau
Smelting Capacity Expansions ALcoA| - Baie Comeau in Quebec = Current capacity — 437 kmt — 163 kmt Soderberg potlines — 274 kmt Pre-Bake potlines = Future capacity — 547 kmt — Project is to convert the Soderberg lines to prebake — Represents 110 kmt growth = Project cost - $700 million (Expansion &
Slide 28: Smelting Capacity Expansions - Deschambault
Smelting Capacity Expansions ALcoA| - Deschambault in Quebec = Current capacity — 240 kmt = Future capacity - 575 kmt = Project cost - $820 Million = Timeline — 2008-2013 500 MW power promised by Quebec government Will secure Deschambault’s position as a world class smelter on a much larger scale
Slide 29: Alumina Capacity Expansions
= Alumina Capacity Expansions = Jamaica (in progress) — 125 kmt brownfield expansion in 2003 — Expansion and productivity improvements place refinery in second quartile of cost curve = Suriname — 140 kmt — Attractive brownfield (2004) in the East — Potential greenfield in the West = Australia — Attr
Slide 30: Aluminum Supply and Demand
2 Aluminum Supply and Demand (entoy) Global! Supply and Demand [Rtorsnaion Production yo feat 1998 19981997 tee © 999 2000 2001-2002 -20NRF OM 41,000 fl ora 583 gies 601 a wi 2 | | i | i = 19 19041985 T0987 1982 t89 NOD Oo mNF OOF Source: GRU - January 2003
Slide 31: Alumina Supply and Demand
2. Alumina Supply and Demand (emety) Global Supply and Demand 0,000 6000 2,000 46,000 40,000 ——Consumaation _ —Froduetion 36,000 20,000 4992 19m 1895 1998 1997 1998 1989 2000 2001 2002 2009F 20D4F 2500 Market Surplus or Defici§ 4... 1935 4000 an eo 629 ea 00 Se ie i 3 it = a cao | a en Gen 80) (480)
Slide 32: Alcoa Primary Products Group
2. Alcoa Primary Products Group = Reduce costs in the system = Idle high cost production = Low capital, low power cost expansions We continue to execute against this plan
Slide 33: For Additional Information, contact
&. For Additional Information, contact: William F. Oplinger 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 34: Appendix
ALcoA| Appendix
Slide 35: Income and EPS Information and Reconciliation
ALcoA| Income and EPS Information and Reconciliation in Millions 1Q03 4Q02 1Q 02 GAAP Net Income (Loss) $151 ($223) $218 Cumulative Effect of Accounting Change $47 - ($34) Discontinued Operations - operating (income) loss ($3) $20 m Discontinued Operations - Loss on Divestitures ca $78 - GAAP Income
Slide 36: Income and EPS Information and Reconciliation (Continued)
Income and EPS Information and ALcoA| Reconciliation (Continued) in Millions 1903 4Q 02 1902 GAAP Eamings (Loss) per share $0.17 ($0.27) $0.26 Cumulative Effect of Accounting Change $0.06 - ($0.04) Discontinued Operations - operating (income) loss 7 $0.03 = Discontinued Operations - Loss on Divestit
Slide 37: Reconciliation of Return on Capital
ALcoA| Reconciliation of Return on Capital 1Q 2003 Bloomberg Annualized in Millions Methodology Ex FAS 143 Net Income $353 $792 Minority Interest $153 $236 Interest Expense (After-tax) $263 $246 Numerator (Sum Total) $769 $1,274 ST Borrowings $147 $115 LT Borrowings $7,896 $8,519 Preferred Equity $5