Slide 1: Alcoa 4th Quarter 2004 Analyst Conference
[ALCOA 4th January Quarter 10, LOGO] 2004 2005 Analyst New York, Conference NY Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Today’s involve factors Quarterly 2 that known discussion Report could andon cause Statements may unknown Form results include 10-Q risks to“forward-looking for differ and the uncertainties. quarter materially ended statements” from Alcoa’s September thoseactual expressed within 30,r
Slide 3: Alain J. P. Belda, Chairman and Chief Executive Officer
Alain J. P. and Chairman Belda Chief Executive Officer
Slide 4: 2004 Review: Financial Performance
2004 Review Financial Income operating 4 from Performance segments continuing Cashoperations from operations of $1.4ofbillion, $2.4 billion up 33% Second from consecutive 2003 Highestyear annual of debt sales repayment in company greater history; thanrevenue $1.1 billion growth of $2.4 billion over
Slide 5: 2004 Review: Record Values
2004 Review Record Values Continue People Resolved Growth Broke Continued 5 ground and safety &to five Portfolio progress Organization strengthen achievement day at Iceland notices, on Management brownfield financial Wenatchee controls expansions and ABIinindustrial refining relations and smelting C
Slide 6: Income from Continuing Operations Bridge
Income $1,800 $1,200 $800 Management 6 1402 276 143 175 629 731 117 207 1055 2004 Other Savings Cost Volume/Mix Price Subtotal Currency Energy 2003 Pressures Cost $600 $1,600 $1,000 from Pressures $400 Actions Continuing $1,400 $200&$0 Management Operations Actions $MM $2,000
Slide 7: Escalating Costs
Escalating Source: 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2004 2003 Alcoa 5 0 Worldwide 35000 30000 25000 20000 15000 10000 7 000 Historical Current Global 2004 Industry Smelter Capacity—000 Alcoa, Costs Costs Costs Cash 2003Costs—2003 CRU MT and Current $ per MT
Slide 8: Forex Exposure
Forex Primary Labor, ~ 90% 100% 110% 120% 130% 140% 150% 12/31/02 Currency (1 Annual AUD CAD Euro * 8 Exclusive 65% cent (1) (4) (8) exposure maintenance, of USD Net revenue 6/30/03 operating Movements Impact Income of weakening) balance (AUD, is *12/31/03 USD smelting Impact consumables sheet CAD,
Slide 9: 2005 Energy and Raw Materials Cost Savings
2005 7 Energy 125 Raw 390 Average Alloying Resin Caustic 0% 20% 40% 60% 80% Fuel Cost S 0 100 200 300 400 500 600 650 Other 80 Procurement 60 Shop 103 9 377 0G&A Oil Materials Inflation Savings -Floor Sustainable Planned Costs unit Materials Productivity cost Savings increases Cost Savings to Overco
Slide 10: Opportunities and Costs
Opportunities Costs Cost Growth Markets Global Both Aerospace Strong Primary Alumina Expect 10 savings alumina &fabricated purchasing tometal Expenditures production complete (20%) targeted and in restarts 2005 product and aluminum organization Russia increases to commercial will offset pricing cont
Slide 11: Richard B. Kelson, Executive Vice President and Chief Financial Officer
[ALCOAB.LOGO] Richard Executive Vice Kelson President Chief Financial Officer
Slide 12: Financial Overview: 4th Quarter
Financial 4th costs 12 Quarter continue Overview income to dampen from continuing cost savings operations achievement of 39Trailing cents/share 4 quarters RevenueROC growth of 8.5%; sequentially; up 150 basis YTD points revenue fromhighest 2003 Lowered ever Year-over-year debt-to-capital improvement
Slide 13: Safety Performance
LWDLWD Safety Best 2004 2003 2002 2001 2000 1999 1998 1997 1996 0.0 0.2 0.4 0.6 114 0.075 0.09 0.12 0.15 0.16 0.18 0.23 0.36 0.46 0.49 2005 Alcoa Rate 13 ever (injuries Milestone Incident safety in 258 per Rate performance million 200,000hours hrs.inworked) worked 2004 inExcludes 2004 recently acqui
Slide 14: 4th Quarter Financial Overview
4thof In LME Sales Cost SG&A % Restructuring Other Effective Minority Income GAAP 14 Millions Quarter of Sales 3-Month $5,878 Income, Net Income $306 Goods (Loss) Interests Tax 80.0% 5.2% Income 3Q 2004 $336 $6,041 Rate and Net Sold from Average From 045.6% Financial 80.8% Other $72 4Q04 ($30) 28% (
Slide 15: Full Year 2004 Financial Overview
2004 In LME Sales Cost SG&A % Restructuring Other Effective Minority Income GAAP 15 Millions of of Sales Full 3-Month $21,092 Income, Net Income $1,250 Goods (Loss) Interests Tax Year 79.4% 5.9% Income 2003 Rate and $23,478 $1,284 Net Sold from Average Financial From 5.5% 2004 79.3% Other $238 24.4%
Slide 16: Balance Sheet and Capital
Balance Capital 114% $1,270 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 73% 95% Growth 120% Days 58 60 54 * Debt/Capitalization Debt 25% 30% 35% 40% 45% $6,085 $7,276 $8,487 29.3% 35.1% 43.1% $5,000 $6,000 $7,000 $8,000 $9,000 Debt-to-Capital 50.7 52.6 55.6 2004 2003 2002 50 16Balances 56$1,142 52 2
Slide 17: 2005 Projected Capital Expenditures
2005 Capital Projected Major Sustaining, Examples Projects Iceland Pinjarra Norway Alumar Spain 17 smelter Growth smelter smelter refinery anode 2005 ofCost 2005 Expenditures upgrade Projects plant Spend expansion Reduction, expansion Large $2.5 Growth Billion and EHS Plans
Slide 18: Recent Divestiture and Equity Transactions
Recent Divestiture Equity AFL Alcoa to 18 reduce Letter sold to gains/losses Transactions own toits of fair the equity Integris Intent value Automotive had interest Telecommunications Metals been to going business, Ryerson-Tull through Fujikura had the Immaterial “other” been will in ownsegment the
Slide 19: 2005 Pension and Stock Option Impact
2005to Pension Stock Plan Currently 19 Earnings Options expense and evaluating Stock Impact options Option binomial ~ in $20 Expense 3rdmillion lattice Quarter,additional model 2005for pre-tax valuation Balance Further Sheet details – 2004 will be minimum provided pension in 2Q conference liability
Slide 20: 4th Quarter Revenue by Market
4th of Market (Distr., Other Building 8% Revenue As Change 4Q Realized Alumina Primary 3rd Aerospace Automotive Commercial B&C Industrial Packaging Note: 20 03 Quarter Party 11% 4Q’04 Packaging 3Q IGT, Conditions from Products 21% Prices by 17% & Revenue Products 04 -8% 26% 9% 10% 23% Construction M
Slide 21: Alumina
Alumina Alignment: 3rd Markets: Intersegment + $ 4 0 40 80 120 60 2001 +5% 4Q04 3Q04 2Q04 1Q04 85 Current LME ATOI Positives Higher Negatives Continued 21Q03 Millions 45% 80 Party Cent/Lb 75 Performance: expected caustic Business & 70 Revenue strong Chemicals Bauxite 65 Revenue soda prices Condition
Slide 22: Primary Metals
Primary Alignment: * Intersegment Markets: 3rd +19% 240 4Q 1Q 2Q 3Q 4Q04 Current LME ATOI 65 70 75 80 85 Positives Restart Negatives Higher Continued 22As04 03 Party 220 of Cent/Lb Performance: $carbon, costs 12/31/04 Business Millions Metals 200 Revenue strong 4.0 180 of Revenue energy million ~ 16
Slide 23: Flat-Rolled Products
Flat Alignment: Distribution Markets: Building Commercial Auto Aero ATOI +11% 4 0 15 30 45 60 75 Current -5% 4Q04 3Q04 2Q04 1Q04 Improving Positives Declining Negatives Can 23Q03Rolled Sheet sheet Performance: $ Business Millions &continues build aerospace Products Aluminum Construction & Vehicle Ot
Slide 24: Engineered Products
Engineered Alignment: Distribution Markets: ATOI Aero IGT Auto +52% 90 Current -17% 4Q04 3Q04 2Q04 1Q04 4Q03 Continued Positives Commercial Declining Negatives Building 24 80 70 Performance: $ Business Millions 60 &build strength Aluminum Construction construction Products 50 & Vehicle vehicle Other
Slide 25: Packaging and Consumer
Packaging Alignment: Flexible Markets: Food Consumer ATOI Closures -27% 60 Current -7% 4Q04 3Q04 2Q04 1Q04 4Q03 Seasonal Negatives Positives 25 40 Packaging $20 Performance: Millions Business Packaging 0weakness Products &Consumer Consumer Conditions: in & consumer Other products, products closures,
Slide 26: Other
Alignment: Other Commercial Markets: Building ATOI Auto 35 Current 4Q04 3Q04 2Q04 1Q04 4Q03 Declining Negatives Positives Telecommunications 26 30 25 Performance: Business 20 &build Alcoa Construction 15 Vehicle 10 rates Conditions: Fujikura 5 $0results announced Millions -5 -10Automotive, haveby be
Slide 27: 1Q 2005 Outlook Summary
Outlook 1Q Alumina Positives Stronger Aerospace Restarts Continued Negatives Normal GM Potentially Smelter 27 ‘05 andOutlook seasonal restart in Summary Ford alumina and input and primary unfavorable primary build costs distribution cost weakness contract metals rates pressure metal currency declini
Slide 28: 2005 Challenges and Offsets
2005 Challenges Offset Capture Manage Integrate 28 input higher large Russian cost capital prices increases assets projects across with the effectively productivity enterprise, passing and procurement through higher initiatives input costs
Slide 29: For Additional Information
For Additional William 390 Alcoa New 29 Park York, F.Avenue Oplinger N.Y.Information, 10022-4608 Director,contact: Telephone: Investor Relations (212) 836-2674 Facsimile: (212) 836-2813 www.alcoa.com
Slide 30: Appendix
Appendix
Slide 31: Income from Continuing Operations Reconciliation
In Millions Discontinued GAAP Restructuring Restructurings Loss Income restructuring 31 onIncome Net and from divestitures Income 4Q03 EPS and continuing operations and ($4) from Information other 3Q04 other $291 $4 ($21) continuing $1 charges 4Q04 charges operations -$283 operating loss $0 $0 and $
Slide 32: EPS Reconciliation (Continued)
Income In Cumulative Discontinued GAAP operations Restructuring Loss Restructurings EPS restructuring Avg. 32 Millions from on Shares Earnings and Divestitures continuing $0.39 4Q03 Effect EPS Diluted and operations andper Information $0.34 other 3Q04 other ofshare Outstanding Accounting operations
Slide 33: Notes on Reconciliation
Notes (1) in Alcoa Management to The Generally are Charges primarily Restructuring restructurings There To operations (2) 33 accordance compare compensate Alcoa Restructuring taken economic can to reviews associated Reconciliation in for believes speaking, be excluding past, order strategic no belie
Slide 34: Return on Capital Reconciliation
Reconciliation In Method Net Interest Numerator (After-tax) ST LT Preferred Minority Common (Sum Denominator ROC Note: Notes: 34 Millions Borrowings Income 8.5% Total) Bloomberg Expense 4Q Interest Equity 7.3% 4Q 03 $1,310 $1,757 $20,742 Annlzd of 04 $6,335 $341 $55 $204 $12,633 8.7% $243 $1,378 Ret
Slide 35: Days Working Capital Reconciliation
Reconciliation 2002 In Receivables Inventories Accounts (Sum Numerator Daily Revenue Number Average Denominator Days 1 Notes: 35Balances Millions 2003 Working Total) Revenue of Daily $20,351 Payable, 2004 reflect Days $2,386 $3,101 from Capital Revenue of365 Days $21,092 Customers reclassifications