Slide 1: 4th Quarter 2003 Analyst Conference
Exhibit 99.2 [Alcoa Logo] 4th Quarter 2003 January 22, 2004 New York, NY Analyst Conference
Slide 2: Forward-Looking Statements
Today’s discussion may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act Such statements relate to future events and Alcoa’s actual results or actions may differ For a summary of the specific risk factors that could Forward-Looking Statements of
Slide 3: Richard B. Kelson, Executive VP and CFO
[Alcoa Logo] Richard B. Kelson Executive VP and CFO
Slide 4: Quarter Highlights
Quarter Highlights Continued strong safety performance Revenues, income from continuing operations up sequentially and year-over-year Continued improvement in the balance sheet Disciplined capital spending Cost savings goal achieved th 4
Slide 5: Safety LWD Incident Rate
0.075 2005 Milestone 0.11 4Q 03 44 fewer 0.10 incidents in 2003 vs. 2002 0.16 2003 0.12 0.19 2002* 0.15 2001 0.16 2000 0.18 1999 0.23 1998 0.36 1997 0.46 1996 0.49 1995 Alcoa* Including Acquisitions ** 2005 Milestone 0.46 1994 0.75 Rate (injuries per 200,000 hrs.) 1993 0.77 1992 Continued strong per
Slide 6: 4th Quarter Financial Overview
Fav/(Unfav) $102 $197 ($209) (1.0)% ($41) (0.6)% $27 $97 0.3% $11 $11 $58 3Q 03 $1,420 $5,335 $4,226 79.2% $305 5.7% $1 ($42) 21.5% $54 $280 $282 4Q03 $1,522 $5,532 $4,435 80.2% $346 6.3% ($26) ($139) 21.2% $43 $291 $340 Quarter 2003 th % of Sales % of Sales 4 Financial Overview In Millions LME 3-Mo
Slide 7: Strengthened Cash Flow
Full year up $591 million or 32% from 2002 levels $150 million year-over-year working capital reduction, with revenue increase of $1.15 billion Capital Expenditures of $867 million; lowest level since 1994 $403 million or 32% decline year-over-year Continued to invest for the long-term to expand alu
Slide 8: Alumina & Chemicals
nt/Lb 70 68 66 64 62 60 58 LME Ce 4Q 03 +8% 3Q03 Performance: LME +45% 2Q03 ATOI ATOI Negatives 1Q03 ns 4Q02 $ Millio 160 120 80 40 0 Continued strength in Australian $ will impact margins Completion of alumina purchase agreement from Sherwin Intersegment Revenue Conditions: Bauxite mining, alumina
Slide 9: Primary Metals
LME cents/lb 70 68 66 64 62 60 58 4Q 03 +2% 3Q 03 LME Performance: +6% 2Q03 ATOI ATOI 1Q03 Negatives 4Q02 $ Millions 180 160 140 120 Higher alumina and power costs Negative impact of currency Intersegment Revenue Conditions: 4.0 million mt of smelting capacity, with 562 kmt currently idled Positives
Slide 10: Flat Rolled Products
4Q 03 -10% 3Q03 Performance: +13% 2Q03 Negatives ATOI 1Q03 4Q02 $ Millions 75 60 45 30 15 0 Can Sheet Auto Conditions: Positives Aluminum sheet and plate for aerospace applications, rigid container Aero Business Flat Rolled Products Alignment: sheet for beverage cans and mill products Markets: Distr
Slide 11: Engineered Products
4Q03 -30% 3Q03 Performance: n/m 2Q03 energy 1Q03 Negatives ATOI 4Q02 $ Millions 75 50 25 0 -25 -50 Continued pressure on IGT Higher raw material costs - Aero IGT Auto Conditions: Hard and soft alloy extrusions, aluminum forgings, Alcoa Fasteners & Positives Business Distribution & Building & Constru
Slide 12: Packaging and Consumer
4Q03 0% 3Q03 Performance: 2Q03 -19% ATOI 1Q03 Negatives 4Q02 $ Millions 80 60 40 20 0 Seasonal decline in Consumer business Sale of LA PET and Latasa Continued pressure on margins due to resin prices Consumer Products Closures Conditions: Reynolds consumer products, closures, flexible packaging, and
Slide 13: Other
+113% 4Q03 3Q03 Performance:n/m 2Q03 Negatives ATOI 1Q03 4Q02 $ Millions 20 0 -20 -40 Residential building and construction seasonally soft Auto Conditions: Alcoa Fujikura, residential building products and automotive Commercial Vehicle Positives Business Tele Other Alignment: structures Markets: Bu
Slide 14: Surpassed $1 Billion Cost Savings Goal
Overheads/ Other Procurement Manufacturing Productivity Savings $152 $385 $475 Cost $1,012m pre-tax 100% 80% 60% 40% 20% 0% 250 2003 Goal 253 4Q 03 savings 241 3Q 03 218 2Q 03 202 1Q 03 Second time in six years that the company has identified and achieved more than $1 billion in 150 4Q 02 140 3Q 02
Slide 15: 2003 Cost Challenge
4Q03 Earnings Indexed to 4Q 00 74 Other +31 Cost Savings +45 Mix -19 Volume -44 Price -39 2003 Cost Challenge Cost savings have mitigated declines in volume, price and mix 4Q00 Earnings Indexed to 100 100
Slide 16: Return on Capital Continues to Show Improvement
d lize 7.6 7.0 4Q 03 r Annua rte Qua adoption of FAS 143. a o 15.9 7.8 4.3 3Q 03 Alc ROC a 15.5 7.0 3.9 2Q 03 o Alc ls tria 15.5 6.4 3.9 1Q 03 us Ind &P S 14.3 4.2 4Q 02 Quintile p To 20 15 10 5 0 Return on Capital Continues to Show Improvement litap Can ornutRe % All indicators are based on the Blo
Slide 17: Pension Performance and 2004 Outlook
pension obligation Change in total plan assets Long term asset return assumption Discount rate assumption – 19.75% return on assets Offset impact of a 50 basis point decline in discount rates Three key drivers regarding pension: Asset performance averted the need for a significant equity charge in 2
Slide 18: Summary
driven by ABS controlled capex and working capital reduction Cost savings – Continued cash generation through operations, Balance sheet improvement Reinvesting to enhance long term cost position Divestitures on track to be completed 1H 2004 Summary We continue to manage what is in our control: 9 9 9
Slide 19: Alain J.P. Belda, Chairman and CEO
[Aloco Logo] Belda Alain J.P. Chairman and CEO
Slide 20: 2003 Achievements
Strong safety performance On track to meet environmental targets Income from continuing operations doubled from 2002 All reporting segments increased ATOI Paid down $1.2 billion in debt Debt-to-capitalization 800 basis points lower than ending 2002 Continued to live our values Improved profitability
Slide 21: Strategies Defined, with Actions Taken: Upstream
Actions completed 250kmt expansion 250kmt expansion underway 600 kmt expansion planned Sale Announced, close 1Q 04 progressing Barra Grande underway -Suriname—- Continued progress on Inert Anode Energy: Rockdale, TX mine expansion Energy: Brazil – Jamalco Pinjarra 100% ownership of Alcoa Aluminio Ch
Slide 22: Strategies Defined, with Actions Taken: Downstream
Joint-Strike Actions A380 solutions; Howmet—Integrated Fairchild acquisition Soft alloy extrusion production platforms Expansion of Closures operations in Middle East and Asia Integrated Ivex Acquisition New products in Consumer, Closures Sale of Latin America PET, Latasa stake, Packaging Equipment
Slide 23: Alcoa's Goals Remain High
eliminate $1.2B in costs on a long term target of Aspire to return on capital in the first quintile of the S&P Industrials Exceed cost of capital throughout the cycle Live our Values Provide superior returns Continue to reduce costs – run rate basis by the end of 2006 Maintain a strong balance sheet
Slide 24: Bottom Line
Bottom Line 2003 performance showed significant improvement over 2002 We continue to position the company for success in 2004 and beyond Alcoa’s strategy is clear and our actions are focused Our goals remain high
Slide 25: [Alcoa Logo]
[Alcoa Logo]
Slide 26: For Additional Information, contact
New York, N.Y. 10022-4608 (212) 836-2674 (212) 836-2813 For Additional Information, contact: William F. Oplinger Director, Investor Relations Alcoa 390 Park Avenue Telephone: Facsimile: www.alcoa.com
Slide 27: Appendix
[Alcoa Logo] Appendix
Slide 28: Income and EPS Information and Reconciliation
2002 $420 ($34) $31 $59 $476 $118 $161 $20 $775 2003 $938 $47 $4 $45 $1,034 ($4) ($21) — $1,009 02 — $18 $59 $95 $161 $20 $130 4Q ($223) ($146) 03 $280 — $2 — $282 $1 — — $283 3Q 03 $291 — $4 $45 $340 ($4) ($21) — $315 4Q Income and EPS Information and Reconciliation In Millions GAAP Net Income Cumu
Slide 29: Income and EPS Information and Reconciliation (Continued)
2002 $0.49 ($0.04 $0.04 $0.07 $0.56 $0.14 $0.19 $0.02 $0.91 850 2003 $1.08 $0.06 $0.00 $0.06 $1.20 ($0.00) ($0.03) — $1.17 857 02 844 4Q ($0.26) $0.02 $0.07 ($0.17) $0.11 $0.19 $0.02 $0.16 03 — — — 859 3Q $0.33 $0.00 $0.33 $0.00 $0.33 03 — 872 4Q $0.33 $0.00 $0.06 $0.39 ($0.00) ($0.03) $0.36 Income
Slide 30: Reconciliation of Return on Capital
246 $55 6.4% $792 $236 $ $1,274 $115 9,950 1Q 2003 Annualized $8,519 $1,332 $ $19,971 $353 $153 263 $769 $147 $55 3.9% $ $7,896 $1,351 10,428 1Q 2003 Bloomberg Method $ $19,877 $864 $300 240 $110 $55 7.0% $ $1,403 $8,309 $1,443 10,181 2Q 2003 Annualized $ $20,098 266 $793 $55 3.9% $346 $181 $ $153 $
Slide 31: Non-GAAP financial measure notes
and The amount Excluding the impacts of these charges can provide an additional basis of comparison. Management believes that of ongoing operating results. As a result, management primarily for strategic reasons as the company has decided After tax and minority interests, special items amounted to i