Slide 1: Quarter 2009 Earnings Conference
Exhibit 99.2 th Quarter 2009 Earnings Conference January 11, 2010
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: Chuck McLane, Executive Vice President and Chief Financial Officer
Chuck McLane Executive Vice President and Chief Financial Officer
Slide 4: Quarter 2009 Financial Overview
4 th Quarter 2009 Financial Overview Cash Sustainability targets achieved Cash from operations of $1.1 billion Free cash flow of $761 million Debt-to-cap at 38.6% down basis points from Q4’08 — Total debt reduced by $759 million since 4Q’08 — Cash on hand of $1.5 billion Loss from continuing operati
Slide 5: Revenue Change by Market 4Q'09
Revenue Change by Market 4Q’09 Third Party Revenue Sequential Change Year-Over-Year Change (3%) 25% (4%) 8% 1% (16%) 4% 11% 43% 39% (21%) (43%) (30%) (45%) (36%) (9%) (21%) (55%) (26%) (35%) 12% 2% 6% 3% 4% 3% 15% 6% 14% 35% Aerospace Automotive B&C Comm. Transport Industrial Products IGT Packaging
Slide 6: Sequential Income Statement Summary
Sequential Income Statement Summary $ Millions 3Q’09 4Q’09 Change Sales $4,615 $5,433 $818 Cost of Goods Sold $3,888 $4,905 $1,017 COGS % Sales 84.2% 90.3% 6.1 % pts. Selling, General Administrative, Other $234 $291 $57 SGA % Sales 5.1% 5.4% 0.3 % pts. Restructuring and Other Charges $17 $69 $52 Eff
Slide 7: Quarter Restructuring and Special Items
4 th Quarter Restructuring and Special Items $ Millions Italy Other After-Tax & Non- Controlling Interests Earnings Per Share Income Statement Classification Segment Restructuring ($15) ($34) ($49) Restructuring Corporate Discrete Tax Items ($41) $123 $82 Taxes Corporate Special Items: Italy Power D
Slide 8: Total Headcount Reduced By 38% Since Q2'08
Total Headcount Reduced By 38% Since Q2’08 Charges ($ Millions) 2009 cash savings of $325 million - Run rate savings of $600 million Headcount Reductions Announced by Quarter Completed Not Yet Completed 15,300 4,400 1,950 2,400 24,600 2H'08 Q1'09 Q2'09 Q3'09 Q4'09 Total
Slide 9: 4Q'09 vs. 3Q'09 Earnings Bridge
4Q'09 vs. 3Q'09 Earnings Bridge Income from Continuing Operations excluding Restructuring & Other Special Items ($ millions) See appendix for reconciliation $39 $5 ($30) ($35) $31 ($37) ($18) $126 ($41) ($31) $9
Slide 10: 2009 vs. 2008 Earnings Bridge
2009 vs. 2008 Earnings Bridge Income (Loss) fro m Continuing Operations excluding Restructuring & Other Specia l Items ($ millions) See appendix for reconciliation $1,012 ($2,298) ($706) ($139) $97 $246 $1,135 ($133) $101 ($685)
Slide 11: Alumina Quarter Highlights and Outlook
Alumina 4 th Quarter Highlights 1 st Quarter Outlook 4 th Quarter Business Conditions 4 th Quarter Performance Bridge 4Q 08 3Q 09 4Q 09 Production (kmt) 3,776 3,614 3,897 rd Party Shipments (kmt) 2,123 2,191 2,716 rd Party Revenue ($MM) ATOI ($MM) Record quarterly production and third party shipment
Slide 12: Primary Metals Quarter Highlights and Outlook
Primary Metals 4 th Quarter Highlights 4 th Quarter Business Conditions 1 st Quarter Outlook 4 th Quarter Performance Bridge 4Q 08 3Q 09 4Q 09 Production (kmt) rd Party Shipments (kmt) rd Party Revenue ($MM) 1,580 1,362 1,900 rd Party Price ($/MT) 2,125 1,972 2,155 ATOI ($MM) (101) (8) (214) Realize
Slide 13: Flat-Rolled Products Highlights and Outlook
Flat-Rolled Products 1 st Quarter Outlook 4 th Quarter Business Conditions 4 th Quarter Highlights 4 th Quarter Performance Bridge ATOI $ Millions 4Q 08 3Q 09 4Q 09 Flat-Rolled Products, excl Russia, China & Other (9) Russia, China & Other (97) (27) (26) Total ATOI (106) Improved mix and pricing – r
Slide 14: Engineered Products and Solutions Highlights and Outlook
Engineered Products and Solutions 4 th Quarter Business Conditions 1 st Quarter Outlook 4 th Quarter Highlights 4 th Quarter Performance Bridge Continued destocking in Aerospace supply chain and further decline in IGT sales Improved performance in the Commercial Transportation market Seasonal impact
Slide 15: Slide 15
Slide 16: Strong Response to Severe Recession Drove Cash Sustainability Savings
Undeniably Strong Response To Severe Recession Drove Cash Sustainability savings to the bottom line… …efficiently managed cash flows and capex… …strengthened the balance sheet …improved liquidity… Adjusted (Loss) Income ($ Millions) Free Cash Flow ($ Millions) Debt ($ Millions) Debt-to-Capital % Cas
Slide 17: Klaus Kleinfeld, President and Chief Executive Officer
Klaus Kleinfeld President and Chief Executive Officer
Slide 18: 2009 In Review
2009 In Review Market Conditions in 2009 Challenging Environment Alcoa Takes Action… …And Delivers Source: Alcoa analysis Alcoa End Markets: Current Assessment of 2009 Conditions Equaled best ever safety performance Exceeded cash sustainability targets Continued growth projects and improved portfoli
Slide 19: Alcoa Lives Its Values Every Day
Alcoa Lives Its Values Every Day Strengthened Reputation Continued Sustainable Growth Established Carbon Leadership Best Ever Safety Performance Total Recordable Incident Rate Lost Workday Incident Rate th Consecutive Year Safety Incident Rate History and Significant Accreditations in 200 9 Founding
Slide 20: Achieved 2010 Procurement Spending Target
Achieved 2010 Procurement Spending Target Procurement Efficiencies: Reduction Targets 2009E (millions) Reduction Targets by Spend Category Savings 2010E Target Achieved 15% 7% 6% 21% 34% 29% 5% 18% 2% 5% 4% 6% 2% 4% Strategic Raw Materials - Alumina and Primary Metals Strategic Raw Materials - Flat-
Slide 21: Surpassed 2010 Overhead Savings Target
Surpassed 2010 Overhead Savings Target Overhead includes SG&A, R&D and Plant Administrative Expenses; excludes divestitures Overhead Rationalization: Reduction Targets and Savings $400M (millions) Overhead Savings Target Savings Target Achieved 100% 80% 2010 Target $412 $200 $400 2009 Savings Target
Slide 22: Capital Expenditures of $1.6B, Down 52% Vs. 2008
Capital Expenditures of $1.6B, Down 52% Vs. 2008 $1,622 $3,438 $1,800 Target $1,250 2010E -53% -23% Capital Expenditure Reduction: Annual CapEx ($ millions) Surpassed Target Growth Sustaining
Slide 23: Reduced Working Capital By $1.3 Billion
Working Capital Days Reduction Targets 2009 YTD Working Capital Change ($ millions) Reduced Working Capital By $1.3 Billion 100% 72% Dec-08 Dec-09 Target -28% $800M decrease in working capital in 200 9 Working Capital Initiatives: Targets and Year-to-date Results Surpassed Target $1,258 $1,302 $800
Slide 24: Strengthened Alcoa's Strategic Position In The Downturn
Strengthened Alcoa’s Strategic Position In The Downturn Growth: Improved Competitive Position Re-Powering: Secured LT Power for 40% of System Portfolio: Optimized For Liquidity and Growth Quebec – 1 MMT Spain – 500 KMT Massena – 300 KMT Intalco – 184 KMT Shining Prospect JV AEES Divestiture Norway S
Slide 25: Unparalleled Growth Opportunity with Ma'aden JV
Unparalleled Growth Opportunity with Ma’aden JV Forms the lowest cost aluminum production complex in the world Creates the world’s most efficient integrated aluminum complex Utilizes fully developed infrastructure, including low-cost natural gas power Lowers Alcoa’s refining and smelting position on
Slide 26: Ma'aden JV Capitalizes on Region's Significant Resources
Ma’aden JV Capitalizes on Region’s Significant Resources Refinery Smelter Bauxite Min e Rolling Mill The largest, most efficient vertically integrated aluminum complex in the world Al Ba’itha mine 4 MMT annually 30+ years of reserves Direct rail line to refinery Operational 2014 Located at Ras Az Za
Slide 27: FCF Improved and Balance Sheet Strengthened
FCF Improved and Balance Sheet Strengthened Cash and Debt (in millions) Free Cash Flow (in millions) $10,578 $10,205 $10,265 $10,073 $9,819 $762 $1,131 $851 $1,066 $1,481 42.5% 38.6% 4Q'08 1Q'09 2Q'09 3Q'09 4Q'09 Gross Debt Cash Debt to Cap FCF Positive in Q4’09 Debt-to- Cap Down 3.9% pts ($409) ($7
Slide 28: Market Conditions in 2010
Market Conditions in 2010 Source: Alcoa analysis Alcoa End Markets: Current Assessment of 2010 vs. 2009 Conditions
Slide 29: Projecting 10% Consumption Growth in 2010
Projecting 10% Consumption Growth in 2010 16.1 0.9 4.2 0.8 6% 2010 Projected Primary Aluminum Consumption by Region (in mmt) Brazil Russia Asia w/o China North America Europe China 2009 vs. 2010 Projected Growth Rates 2010 Estimated Consumption -15% -15% -5% 4% -15% -5% 6% Other * 7% -2% *Other cons
Slide 30: 2010 Global Primary Metal Balance
China Western World 2010 Global Primary Metal Balance 2010E Primary Metal Supply / Demand Balance (in kmt) Surplus Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI Surplus 2010 Annualized Run Rate 16,100 2010 Restarts or Curtailments 2010 Brown//Greenfield Expansion Total Supply 16,300 Demand (16
Slide 31: 2010 Global Alumina Balance
2010 Global Alumina Balance China Western World 2010E Alumina Supply / Demand Balance (in kmt) Source: Alcoa estimates, CRU, CNIA, IAI, as of 11/24/09 Balanced 2010 Annualized Run Rate 25,900 Imports from Western World 5,000 Supply 30,900 Demand (30,900) (Deficit) / Surplus 2010 Annualized Run Rate
Slide 32: Tight Physical Conditions Driving Regional Premiums
Tight Physical Conditions Driving Regional Premiums Source: Bloomberg, IAI 65 days of consumption Non-LME at 17 days LME at 48days Global Inventories Leveling Off Europe +250% Japan +79% Midwest - US +30% Global inventory days of consumption and regional premiums Regional Premiums YTD 2009 Change
Slide 33: Aluminum Forward Curve Return Mechanics
Aluminum Forward Curve Return Mechanics Financial Participants Responding to Strong Forward Curve Percentage Change in Forward Curves Total Value of LME Inventories 18-month Forward +$145 Return = Price Forward – Price Spot – Storage – Insurance Price Spot 18-month Forwards vs. Spot $ Billions Sourc
Slide 34: Aggressively Pursuing 2010 Operational Targets
Aggressively Pursuing 2010 Operational Targets Procurement Overhead Sustaining Capex Working Capital Original 2010 Target New 2010 Target $2,000 $2,500 $400 $500 $850 $850 $0 $200 2010 Cash Sustainability Operational Targets and Actual Performance $ Millions Locking-in Savings Overcoming Headwinds N
Slide 35: Conditions Improve in 2010 – We Maintain Aggressive Stance
Conditions Improve in 2010 – We Maintain Aggressive Stance Market Environment Alcoa Actions 2010 Commitments Key end-markets improve vs. 2009; absolute levels still low Aluminum market in modest surplus Currency and energy cost headwinds persist Aggressive ly pursuing 2010 operational targets Focusi
Slide 36: Additional Information
Additional Information Matthew E. Garth Director, Investor Relations 390 Park Avenue New York, NY 10022-4608 Telephone: (212) 836-2674 www.alcoa.com
Slide 37: Slide 37
Slide 38: Effective Tax Rate
Effective Tax Rate Effective tax rate, excluding discrete tax items is a non-GAAP financial measure. Management believes that the Effective tax rate, excluding discrete tax items is meaningful to investors because it provides a view of Alcoa’s operational tax rate. $ Millions 1Q’09 2Q’09 3Q’09 4Q’09
Slide 39: Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa
Reconciliation of ATOI to Consolidated Net (Loss) Income Attributable to Alcoa (in millions) 4Q08 1Q09 2Q09 3Q09 4Q09 Total segment ATOI $ 28 $ 2,199 $ (143) $ (132) $ $ (101) $ (234) Unallocated amounts (net of tax): Impact of LIFO (7) Interest income (1) Interest expense (81) (265) (74) (75) (78)
Slide 40: Reconciliation of Adjusted (Loss) Income
Reconciliation of Adjusted (Loss) Income (in millions) Quarter ended Year ended December 31, March 31, June 30, September 30, December 31, December 31, December 31, Net (loss) income attributable to Alcoa $ (1,191) $ (497) $ (454) $ 77 $ (277) $ (74) $ (1,151) (Loss) income from discontinued operati
Slide 41: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow (in millions) Quarter ended December 31, March 31, June 30, September 30, December 31, Cash provided from operations $ 608 $ (271) $ $ 184 $ 1,124 Capital expenditures* (1,017) (471) (418) (370) (363) Free cash flow $ (409) $ (742 ) $ (90) $ (186) $ discontinued oper
Slide 42: Other Reconciliations
Other Reconciliations Net Debt (in millions) Year ended December 31, December 31, Change Total debt $ 10,578 $ 9,819 $ (759) Less: Cash and cash equivalents 1,481 Net Debt $ 9,816 $ 8,338 $ (1,478) Debt-to-Capital ($ in millions) As of December 31, 2009 Debt-to-Capital Hypothetical debt repayment Ad
Slide 43: Other Reconciliations
Other Reconciliations Days Working Capital ($ in millions) Quarter ended December 31, December 31, Change Receivables from customers, less allowances $ 1,883 $ 1,529 Add: Inventories 3,238 2,328 Less: Accounts payable, trade 2,518 1,954 Working Capital $ 2,603 $ 1,903 Sales $ 5,688 $ 5,433 Less: bus