Slide 1: Third Quarter 2005 Earnings Conference
Exhibit 99.2 [Alcoa logo] Quarter 2005 October 10, 2005 rd Earnings Conference
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: Richard B. Kelson, Executive Vice President and Chief Financial Officer
Richard B. Kelson Executive Vice President Chief Financial Officer
Slide 4: 3rd Quarter Overview
3rd Quarter Overview Financial - Income from continuing operations of $0.33/share - Cash from operations of $792 million before discretionary pension contribution - Revenue up 13% year-over-year to $6.6 billion; down sequentially on lower metal prices - 3Q’05 ROC of 7.8%, trailing four quarters ROC
Slide 5: Safety
Safety LWD Incident Rate 0.4 87 LWD in 199 million hours worked in 2005 0.2 0.16 0.15 0.12 0.09 0.087 0.075 0.0 2001 2002 2003 2004 2005YTD 2005 Zero Incident Locations Milestone 12 month rolling average ending August 2005 Lost Work Days Total Recordables # of 82% # of Locations Locations 53% 400 36
Slide 6: Income statement 2Q'05 vs 3Q'05
In Millions 2Q’05 3Q’05 Fav/(Unfav) Sales $6,698 $6,566 ($132) Cost of Goods Sold $5,414 $5,405 $9 % of Sales 80.8% 82.3% (1.5 pts) SG&A $348 $317 $31 % of Sales 5.2% 4.8% 0.4 pts Restructuring and Other Charges $260 $7 $253 Other Income, Net (Gain) ($347) ($92) ($255) Effective Tax Rate 8.4% 24.3%
Slide 7: 2005 YTD Cost Pressures
2005 YTD Cost Pressures 400 378 $19 $39 $49 92% successful $18 resin pass-through 200 $44 Millions 65% successful alloy pass-through $ $87 $14 $93 $15 Resin Alloys Bauxite Caustic Other Labor Other Total YTD 2005 Carbon, Coke & Pitch Transportation
Slide 8: 2005 YTD Energy Increases
2005 YTD Energy Increases 400 Smelters 374 Refineries Downstream Operations $21 $19 300 $43 $ Millions $63 200 $28 $200 Price Currency Outages Volume, Restarts & Acquisitions Net Power Sales Other Total
Slide 9: 3rd Quarter 2005 Cash Flow Review
3rd Quarter 2005 Cash Flow Review $ In Millions 2Q’05 3Q’05 Capital Expenditures Net Income 460 289 $487* $542* $600 65% 64% DD&A 312 322 Change in Working Capital (268) 240 $400 Other Adjustments (120) (59) 60% Pension Contribution 0 (300) $200 58% Cash From Operating Activities 384 492 $0 55% Divi
Slide 10: 3rd Quarter Market Conditions
3rd Quarter Market Conditions Revenue by Market As of 3Q’05 Revenue Changes by Market Change from Change from Primary Packaging 3Q’04 2Q’05 Products 24% 6% -4% LME - 1 Month Lag 26% Realized Prices Alumina 6% -4% Primary 5% -1% Aerospace Industrial 10% 3rd Party Revenue Products Aerospace 16% -4% 4%
Slide 11: Alumina
Alumina Bauxite mining and alumina refining Markets ATOI Performance -8% Intersegment $ Millions -14% LME $/MT Revenue 205 1950 1850 155 3rd Party Revenue 130 1750 105 80 1650 3Q04 4Q04 1Q05 2Q05 3Q05 ATOI LME - 1 Qtr Lag Current Business Conditions Positives Negatives Higher LME based pricing Conti
Slide 12: Primary Metals
Primary Metals 4.0 million mt of smelting capacity, with 406,000 mt currently idled Markets ATOI Performance -11% Intersegment $ Millions LME $/MT -10% Revenue 240 1950 160 1850 3rd Party 120 Revenue 80 1750 0 1650 3Q 04 4Q04 1Q05 2Q05 3Q05 ATOI LME - 1 Mth Lag Current Business Conditions Positives
Slide 13: Flat-Rolled Products
Flat Rolled Products Aluminum sheet and plate for aerospace applications, rigid container sheet for beverage cans, and mill products Markets ATOI Performance +31% Can Sheet Distribution & $ Millions +16% Other 90 Building & 70 Construction Commercial Vehicle Aero 40 Auto 3Q04 4Q04 1Q05 2Q05 3Q05 Cur
Slide 14: Extruded and End Products
Extruded and End Products Hard- and soft-alloy extrusions, architectural extrusions, and vinyl siding Markets: ATO! Performance Auto 10% Distribution & ‘Aero | Other Building & ‘Construction Current Business Conditions Positives Negatives Seasonal declines in building and construction 4
Slide 15: Engineered Solutions
Engineered Solutions Solutions used in the automotive, aerospace, commercial transportation, and industrial markets Markets ATOI Performance Industrial & Other -18% IGT -47% $ Millions 60 Commercial Auto Vehicle Aero 3Q04 4Q04 1Q05 2Q05 3Q05 Current Business Conditions Positives Negatives Continued
Slide 16: Packaging and Consumer
Packaging & Consumer Consumer products, closures, food packaging, flexible packaging, and packaging graphics design Markets ATOI Performance -18% Flexible Packaging Consumer $ Millions & Other -30% Products 50 Food Packaging Closures 0 3Q04 4Q04 1Q05 2Q05 3Q05 Current Business Conditions Positives N
Slide 17: Outlook
Outlook Summary 4Q ‘05 Outlook Positives Negatives - Current metal prices - Seasonal declines in higher than 3Q’05 building and construction average - Continued Russia - Aerospace and integration costs commercial vehicle - Higher resin costs markets are strong - Hurricane impact - Seasonal upswing i
Slide 18: Alain Belda, Chairman and Chief Executive Officer
Alain Belda Chairman Chief Executive Officer
Slide 19: 3Q Review
3Q Review - Elevated input costs continue (caustic, resins) - Energy costs unusually high - 3rd quarter metal pricing lower based on one-month lag, prices have rebounded subsequently - Productivity strides have been made, but not fully offsetting cost increases - Aggressive creep and capacity growth
Slide 20: Fundamentally Strong Franchise
Fundamentally Strong Franchise Consistent Returns (ROC) Steady Cash Generation (CFO) 10% 3.0 9% 8% 2.5 7% 2.0 6% billions 5% $ 1.5 4% 1.0 3% 2% 0.5 2001 2002 2003 2004 2005 0.0 YTD ROC ROC excluding major growth projects 2001 2002 2003 2004 Debt Level within Target Range Unmatched Growth Opportuniti
Slide 21: Strategic Direction Unchanged
Strategic Direction Unchanged - Executing on upstream growth projects including secure energy - Integrating strategic investments in Russia, China - Focused on portfolio management - Systematically building ABS platforms to achieve operational excellence - Capitalizing on strong market conditions (u
Slide 22: For Additional Information, contact
For Additional Information, contact: William F. Oplinger Director, Investor Relations Alcoa Park Avenue New York, N.Y. 10022-4608 Telephone: (212) 836-2674 Facsimile: (212) 836-2813 www.alcoa.com
Slide 23: Appendix
Appendix
Slide 24: Reconciliation of Return on Capital
Reconciliation of Return on Capital
Slide 25: Reconciliation of Adjusted Return on Capital
Reconciliation of Adjusted Return on Capital 3Q’05 2Q’05 1Q’05 4Q’04 3Q’04 Bloomberg 3Q’05 Bloomberg 2Q’05 Bloomberg 1Q’05 Bloomberg 4Q’04 Bloomberg 3Q’04 In Millions Method Annlzd Method Annlzd Method Annlzd Method Annlzd Method Annlzd Numerator (Sum Total) $1,763 $1,683 $1,744 $2,393 $1,673 $1,478
Slide 26: Reconciliation of Adjusted Return on Capital
Reconciliation of Adjusted Return on Capital FY 04 FY 03 Bloomberg Bloomberg In Millions Method Method Numerator (Sum Total) $1,753 $1,406 Russia Net Income $0 $0 Adjusted Net Income $1,753 $1,406 Denominator (Sum Total) $20,852 $20,198 Capital Projects in Progress & Russia Capial Base ($1,118) ($1,