Slide 1: 4th Quarter 2007 Analyst Conference
Exhibit 99.2 January 9, 2008 4 Quarter 2007 Analyst Conference th
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: Charles D. McLane, Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Financial Officer Charles D. McLane
Slide 4: Global Days of Consumption
4 Source: IAI and LME Global Days of Consumption
Slide 5: Primary Aluminum Consumption Growth Rates
5 Primary Aluminum Consumption Growth Rates Source: Alcoa analysis
Slide 6: China Metal Balance
6 China Metal Balance Source: IAI and China Nonferrous Industry Association
Slide 7: 4Q07 and 2007 Global Market Dynamics
7 4Q07 and 2007 Global Market Dynamics
Slide 8: 4th Quarter 2007 Financial Overview
8 th Quarter 2007 Financial Overview – Income from continuing operations of $624m or $0.74 per share – Revenues of $7.4b – Cash from operations of $643m – Debt-to-cap at 30.2% – Trailing four quarters ROC of 12.7%
Slide 9: 4th Quarter 2007 Financial Overview
9 th Quarter 2007 Financial Overview $ In Millions 3Q'07 4Q'07 Change Sales $7,387 $7,387 $0 Cost of Goods Sold $5,910 $6,153 $243 % of Sales 80.0% 83.3% 3.3 pts. SG&A $365 $383 $18 % of Sales 4.9% 5.2% 0.3 pts. Restructuring and Other Charges $577 ($14) ($591) Interest Expense $151 $81 ($70) Other
Slide 10: 4th Quarter vs. 3rd Quarter Comparison
10 rd Quarter vs. 4 th Quarter Comparison
Slide 11: 4th Quarter 2007 Cash Flow Review
11 th Quarter 2007 Cash Flow Review $ In Millions 4Q'06 4Q'07 Net Income $359 $632 DD&A Change in Working Capital Other Adjustments (793) Pension Contributions (53) (25) Cash From Operating Activities 1,333 Dividends to Shareholders (131) (143) Change in Debt (676) Dividends to Minority Interests (1
Slide 12: Alumina Quarter Highlights and Outlook
12 4Q’07 3Q’07 4Q’06 2,030 1,937 2,084 3 Party Shipments (kmt) 3,855 3,775 3,790 Production (kmt) Party Revenue ($MM) ATOI ($MM) 2% production increase sequentially Higher energy and freight costs Unfavorable currency Alumina th Quarter Highlights st Quarter Outlook Prices to follow approximate two-
Slide 13: Primary Metals Quarter Highlights and Outlook
13 th Quarter Highlights ATOI ($MM) 2,646 2,734 2,766 3 Party Price ($/MT) 1,597 1,600 1,698 3 Party Revenue ($MM) 4Q’07 3Q’07 4Q’06 3 Party Shipments (kmt) Production (kmt) Primary Metals st Quarter Outlook th Quarter Business Conditions Lower realized pricing sequentially Unfavorable currency 3% p
Slide 14: Flat-Rolled Products Quarter Highlights and Outlook
14 Higher Russia ramp-up costs Market weakness – especially in Europe Distributor de-stocking persists Impact of currency / restructuring efforts in Australia Rolled Products Startup costs at Bohai 4Q’07 3Q’07 4Q’06 (16) ATOI ($MM) 2,243 2,309 2,127 Party Revenue ($MM) Flat-Rolled Products th Quarte
Slide 15: Engineered Solutions
15 (7) (7) (4) Other (35) 3Q’07 Total Investment Castings, Forgings, Fasteners AFL, Auto Castings and Structures 4Q’06 (11) 4Q’07 Aerospace market remains strong but shipments tempered by de-stocking Continued weakness in North American commercial transportation partially mitigated by share gains De
Slide 16: Extruded and End Products
16 (7) Soft Alloy Joint Venture and Other 4Q’07 3Q’07 4Q’06 Total Global Hard Alloy Extrusions, Building & Construction Systems and Russia Comparable market and operating conditions as 3Q Extruded and End Products ATOI ($MM) th Quarter Business Conditions st Quarter Outlook Building & Construction m
Slide 17: Packaging and Consumer
17 (1) Other 3Q’07 Total Reynolds Food Packaging and Flexible Packaging Closure Systems and Consumer Products (9) 4Q’06 (3) 4Q’07 Packaging and Consumer ATOI ($MM) th Quarter Business Conditions st Quarter Outlook Sale expected to close by end of st quarter – Seasonal decline in Closures business of
Slide 18: 2007 Financial Performance
18 2007 Financial Performance – Record income from continuing operations of $2.6b or $2.95 per share – Record revenues of $30.7b – Record cash from operations of $3.1b – Debt to cap of 30.2% – Trailing twelve months ROC of 16.1% excluding impact of growth projects – Dividend increase of 13% – Total
Slide 19: Income From Continuing Operations Excluding Restructuring & Transaction Costs
Income From Continuing Operations Excluding Restructuring & Transaction Costs $ Millions 3,700 > 214 163 1,140 3.418 | Bix 3,425 | RE | er 3,150 — 2.875 —| 2,600 — 2,325 —| = — < g 2,050 — 1775 1,500
Slide 20: 2007 Cash Flow Review
20 2007 Cash Flow Review $ In Millions 2006 2007 Net Income $2,248 $2,564 DD&A 1,280 1,269 Change in Working Capital (903) Other Adjustments (1,182) Pension Contributions (397) (322) Cash From Operating Activities 2,567 3,111 Dividends to Shareholders (523) (590) Change in Debt Dividends to Minority
Slide 21: Share Repurchase Program
21 Share Repurchase Program Based on 870M Shares Outstanding As of January 19, 2007 ~8% repurchased as of 4Q 2007 ~17% additional authorized – 10% repurchase program authorized January 2007 – ~68M shares repurchased through 4Q 2007 – Expanded 25% repurchase program authorized October 2007 Timeline O
Slide 22: Targets and Results
Targets Results ROC Exceed cost of capital ¥ Bloomberg ROC = 12.7% : : : CFO=$3.1B Cash from Operations Exceed capital expenditures | ¥/ Het CAPEX = $3168 Volume/Mix/Productivity Exceed cost inflation X Cost inflation Greater by $262M : Exceed 2006 in every ¥ EngineeredSolutions Packaging & Consumer
Slide 23: Alain J.P. Belda, Chairman and Chief Executive Officer
Chairman and Chief Executive Officer Alain J.P. Belda
Slide 24: 2007 Accomplishments
24 2007 Accomplishments – Environmental, Health and Safety – Innovation and Technology – Portfolio Management – Long-Term Growth – Financial Performance
Slide 25: Sustainability, Environment, Health and Safety
25 Sustainability, Environment, Health and Safety – Named a component of the Dow Jones Sustainability Index for the sixth year – Recognized as “Best in Class” in response to climate change by the Carbon Disclosure Project – Earned “Best in Class” status by Storebrand Investments – Ranked 1 st in the
Slide 26: Innovation and Technology
26 – New generation of aluminum-lithium alloys – New generation of energy-efficient, environmentally friendly transportation – New market penetration in oil and gas – Stronger, lighter, faster defense solutions Innovation and Technology
Slide 27: Portfolio Management
27 Portfolio Management – Signed agreement to sell the packaging business – Monetized Chalco investment – Finalized the soft alloy extrusions joint venture – Restructured the Electrical and Electronic Solutions business – Closed on the auto castings sale
Slide 28: 2007 Excluding Soft Alloy, Castings, P&C
2007 2007 Excluding Soft Alloy, Castings, P&C Sales ($ billions) 30.7 26.3 SG&A/Sales 4.8% 4.7% EBITDA/Sales 15.5% 16.7% ROC 12.7% 13.5% Headcount 107,000 98,000
Slide 29: Long-Term Growth
29 Long-Term Growth – Opened our 3 rd FRP facility (Kunshan) in China – Continued to expand the Bohai plant in China – Continued to make progress on the Russia assets – Continued the construction of the Juruti and Sao Luis projects – Invested in the Serra do Facao hydroelectric project – Opened the
Slide 30: Long-Term Growth: Re-Powering the Smelter Portfolio
30 Long-Term Growth Re-Powering the Smelter Portfolio
Slide 31: 2007 Financial Performance
31 2007 Financial Performance – Record income from continuing operations of $2.6b or $2.95 per share – Record revenues of $30.7b – Record cash from operations of $3.1b – Debt to cap of 30.2% – Trailing twelve months ROC of 16.1% excluding impact of growth projects – Dividend increase of 13% – Total
Slide 32: 2007 Challenges
32 2007 Challenges – Higher input costs – Unfavorable currency – Primary curtailments – Progress in Russia – Higher construction costs
Slide 33: 2008 Outlook
33 2008 Outlook – Market Fundamentals – Market Conditions – Portfolio Improvements – Catalysts
Slide 34: LME Forward Price Curve
34 LME Forward Price Curve Source: LME
Slide 35: Primary Aluminum Consumption Growth Rates
35 Primary Aluminum Consumption Growth Rates Source: Alcoa analysis
Slide 36: 2008 Market Outlook and Impact
36 2008 Market Outlook and Impact
Slide 37: 2008 Production Impact Drivers
Iceland production (300,000 tons) Pinjarra at full capacity (90,000 additional tons) Recovery from Primary curtailments (Rockdale, Tennessee, Jamaica, Guinea) Russia and China improvement Roll-off of RPD caps
Slide 38: For Additional Information, Contact: Tony Thene
38 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 40: Appendix
40 APPENDIX
Slide 41: Reconciliation of ATOI to Consolidated Net Income
41 Reconciliation of ATOI to Consolidated Net Income $ 2,564 $ 632 $ 555 $ 715 $ 662 $ 2,248 $ 359 Consolidated net income (50) (10) Other (7) (3) (1) (11) Discontinued operations (307) (311) (18) (379) (386) Restructuring and other charges (388) (100) (101) (101) (86) (317) (82) Corporate expense (
Slide 42: Reconciliation of Return on Capital
42 Return on Capital (ROC) is presented based on Bloomberg Methodology which calculates ROC based on trailing four quarters. Reconciliation of Return on Capital 4Q'07 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 Bloombe
Slide 43: Reconciliation of Adjusted Return on Capital
43 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 44: Reconciliation of EBITDA Margin
44 Reconciliation of EBITDA Margin Year ended December 31, Year ended December 31, Year ended December 31, 2006 2007 2006 2007 2006 2007 Flat-Rolled Products Extruded and End Products Engineered Solutions After-tax operating income (ATOI) (1) $ 255 $ 200 $ 60 $ 109 $ 331 $ 316 Add: Income taxes Less
Slide 45: Reconciliation of EBITDA Margin - P&C
45 Reconciliation of EBITDA Margin – P&C Year ended December 31, 2006 2007 Packaging and Consumer: After-tax operating income (ATOI) (1) $ 95 $ 148 Add: Income taxes Less: Other income and (expenses), net (2) Net margin Add: Depreciation, depletion, Earnings before interest, taxes, depreciation, and
Slide 46: Days of Working Capital
46 39.1 45.3 44.1 Days of Working Capital $ 7,387 $ 7,387 $ 7,840 Sales $ 3,141 $ 3,638 $ 3,761 Working Capital 2,787 2,649 2,407 Less: Accounts payable, trade 3,326 3,311 3,380 Add: Inventories $ 2,602 $ 2,976 $ 2,788 Receivables from customers, less allowances December 31, 2007 September 30, 2007
Slide 47: Reconciliation of Adjusted Income - Quarter
47 Reconciliation of Adjusted Income - Quarter Quarter ended 3Q07 4Q07 Net income $ 555 $ 632 (Loss) income from discontinued operations (3) Income from continuing operations Gain on sale of Chalco investment (1,140) – Transaction costs* Restructuring and other charges** (323) Income from continuing
Slide 48: Reconciliation of Adjusted Income - Annual
48 Reconciliation of Adjusted Income – Annual Year ended 2006 2007 Net income $ 2,248 $ 2,564 Income (loss) from discontinued operations (7) Income from continuing operations 2,161 2,571 Transaction costs* – Restructuring and other charges** Income from continuing operations – excluding restructurin
Slide 49: Portfolio Management
49 Portfolio Management Soft Alloy Packaging Automotive 2007 2007 Extrusions & Consumer Castings As Adjusted Sales $ 30,748 $ 1,041 $ 3,288 $ 132 $ 26,287 Selling, general administrative, and other expenses (SG&A) $ 1,472 $ 30 $ 216 $ 3 $ 1,223 SG&A / Sales 4.8% 2.9% 6.6% 2.3% 4.7% EBITDA Margin: Ne
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