Slide 1: 2nd Quarter 2004 Analyst Conference
Exhibit 99.2 2nd Quarter 2004 Analyst Conference July 22, 2004 New York, NY
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: Alain J. P. Belda, Chairman and Chief Executive Officer
Alain J. P. Belda Chairman and Chief Executive Officer
Slide 4: YTD Performance
YTD Performance • Best safety performance ever 1st half LWD of 0.07 90% of the company without an LWD in the first half Strong operational execution Record quarterly and YTD earnings ~ $500M of revenue growth YTD in addition to LME price increases 5 of 6 segments up YTD Double digit ROC achieved in
Slide 5: 2004 YTD Performance
2004 YTD Performance Financial discipline continues Cap-ex held to 68% of depreciation Debt-to-cap at 33.6% (target range 25-35%) Days working capital at 53.6, down from 56.3 one year ago Divestiture Process Complete Total cash proceeds of ~ $640 million ($560m Alcoa Share), with certain businesses
Slide 6: Richard B. Kelson, Chief Financial Officer
Richard B. Kelson Executive Vice President Chief Financial Officer
Slide 7: 2nd Quarter Highlights
2nd Quarter Highlights • Revenues increased 7% sequentially and 11% Y/Y to $6.1 billion, highest since 4Q 2000 • Revenue gains in every segment over prior quarter • Income from continuing operations highest ever, up 15% Q/Q and 86% Y/Y • Continued ROC improvement to 10.2% annualized – above cost of
Slide 8: 2nd Quarter Highlights (continued)
2nd Quarter Highlights (continued) • SG&A declined to 5.2% of sales • Capex remained low at $221m, 73% of depreciation • Debt-to-Capital ratio declined to 33.6%
Slide 9: Safety
Safety LWD Incident Rate Continued strong performance in 2Q 2004 Rate (injuries per 200,000 hrs.) * Reynolds, Howmet/Huck included beginning in 2002. IVEX and Fairchild included beginning in 2004. ** Includes IVEX and Fairchild prior to 2004.
Slide 10: 2nd Quarter 2004 Financial Overview
2nd Quarter 2004 Financial Overview In Millions 2Q04 1Q Fav/(Unfav) LME 3-Month Average ($/MT) $1,692 $1,667 $25 Sales $6,092 $5,696 $396 Cost of Goods Sold $4,807 $4,438 ($369) % of Sales 78.9% 77.9% (1.0 pts) SG&A $319 $344 $25 % of Sales 5.2% 6.0% 0.8 pts Restructuring and Other Charges $5 ($31)
Slide 11: Balance Sheet: 2Q vs. 2Q
Balance Sheet: 2Q 04 vs. 2Q 03 2Q2003 excludes $440m proceeds from forward metal sale. Free Cash Flow defined as Operating Cash Flow less Capital Expenditures. Balances reflect reclassifications for changes in status from assets held for sale to assets held and used
Slide 12: 2nd Quarter Market Conditions Global View
2nd Quarter Market Conditions Global View • Market Conditions Change from 2Q 03 Change from 1Q 04 Realized Prices Alumina 33% 8% Primary 25% 5% 3rd Party Revenue Aerospace 5% 6% Automotive -1% 0% Commercial Transportation 40% 6% B&C 9% 15% Industrial Products 16% 14% Packaging 14% 7%
Slide 13: Alumina & Chemicals
Alumina & Chemicals Alignment: Bauxite mining, alumina refining Markets: ATOI Performance: Current Business Conditions: Positives Negatives LME-based pricing continues to be favorable Weaker USD would negatively impact margins
Slide 14: Primary Metals
Primary Metals Alignment: 4.0 million mt of smelting capacity, with 762 kmt currently idled * Markets: ATOI Performance: Current Business Conditions: Positives Negatives Continued strong metal prices ABI Impact Continued program of metal purchases to optimize selling of value-added products Higher a
Slide 15: Flat Rolled Products
Flat Rolled Products Alignment: Aluminum sheet and plate for aerospace applications, rigid container sheet for beverage cans, and mill products Markets: ATOI Performance: Current Business Conditions: Positives Negatives Industrial markets remain strong Seasonal softening in Europe Seasonal strength
Slide 16: Engineered Products
Engineered Products Alignment: Hard and soft alloy extrusions, aluminum forgings, Alcoa Fasteners & Howmet products Markets: ATOI Performance: Current Business Conditions: Positives Negatives Commercial vehicle market to maintain Q2 strength Automotive OEM shutdowns and platform build rate reduction
Slide 17: Packaging & Consumer
Packaging & Consumer Alignment: Reynolds consumer products, closures, food packaging, flexible packaging, and packaging graphics design Markets: ATOI Performance: Current Business Conditions: Positives Negatives Seasonal strength in consumer products Seasonal weakness in closures Resin prices remain
Slide 18: Other
Other Alignment: Alcoa Fujikura, residential building products, automotive structures and Integris Joint Venture Markets: ATOI Performance: Current Business Conditions: Positives Negatives Building and Construction seasonally strong Auto OEM s hutdowns and platform build rate reductions
Slide 19: Outlook Summary
Outlook Summary 3Q ‘04 Outlook Positives Negatives LME prices remain high ABI and Kama Impact Industrial markets are strong Continued high energy costs Kitts Green outage won’t recur Resin prices remain high Seasonal softening in Europe and summer maintenance outages in North America Auto OEM shutdo
Slide 20: Cost Savings Challenge
aa Cost Savings Challenge ‘Cost Savings by Segment (Program-to-date) Primary Fiat. Net Income Bridge, 2Q 04 vs. 4Q 03 Other Rolled Products Pre-Tax, Pre-Minority $680 $40 | $600 $190 = rin. $53 iat $520 | $66 | $440 $360 $280 seat | ‘Admin and [ al Overheads ¢ + & e * & & s & Manufacturing a Product
Slide 21: Return on Capital
Return on Capital All indicators are based on the Bloomberg ROC Methodology.
Slide 22: Alain J. P. Belda, Chairman and Chief Executive Officer
Alain J. P. Belda Chairman and Chief Executive Officer
Slide 23: Market Fundamentals Remain Intact
Market Fundamentals Remain Intact Alumina Aluminum Source: Consensus forecast Inventory Days of Consumption LME & IAI:
Slide 24: Downstream Markets Gaining Momentum
Downstream Markets Gaining Momentum
Slide 25: Growth Initiatives - Upstream
Growth Initiatives - Upstream Active Upstream Projects
Slide 26: Growth Initiatives - Downstream
Growth Initiatives - Downstream Fabricating facilities in Russia Samara - flat rolled products, extrusions, and forgings Belaya Kalitva - flat rolled products, extrusions, tubes, and forgings Russian and global markets Awaiting government approvals Bohai rolling mill Partnership with CITIC Alcoa to
Slide 27: Our Top Priorities
Our Top Priorities Long-term value creation Values are our foundation Cost control, capital discipline, customers - ABS is how we do business Deliver on our short term goals Manage the portfolio Improve the balance sheet Capitalize on improving market conditions Strengthening US economy, key markets
Slide 28: 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 29: Appendix
ALCOA Appendix
Slide 30: Income and EPS Information and Reconciliation
Income and EPS Information and Reconciliation In Millions 2Q 04 1Q 2Q GAAP Net Income $404 $355 $216 Discontinued operations - operating loss — — $2 Discontinued operations - gain on divest. — ($5) ($1) GAAP Income from continuing operations $404 $350 $217 Restructuring and other charges (2): Restru
Slide 31: Income and EPS Information and Reconciliation (Continued)
Income and EPS Information and Reconciliation (Continued) In Millions 2Q 1Q 2Q GAAP Earnings per share $0.46 $0.41 $0.26 Discontinued operations - operating loss Discontinued operations - gain on divestitures GAAP Earnings per share from continuing operations $0.46 $0.40 $0.26 Restructuring and othe
Slide 32: Notes to Reconciliation
Notes to Reconciliation (1) Alcoa believes that income from continuing operations excluding restructuring and other charges is a measure that should be presented in addition to income from continuing operations determined in accordance with GAAP. The following matters should be considered when evalu
Slide 33: Reconciliation of Return on Capital
Reconciliation of Return on Capital In Millions 2Q 04 Bloomberg Method 2Q 04 Annlzd 1Q 04 Bloomberg Method 1Q 04 Annlzd 4Q 03 Bloomberg Method 4Q 03 Annlzd 3Q 03 Bloomberg Method 3Q 03 Annlzd 2Q 03 Bloomberg Method 2Q 03 Annlzd Net Income $1,330 $1,616 $1,142 $1,420 $938 $1,164 $424 $1,120 $346 $864
Slide 34: Reconciliation of Days Working Capital
Reconciliation of Days Working Capital In Millions 2Q 2004 2Q 2003 1 Receivables from Customers $2,983 $2,614 Inventories $2,855 $2,569 Accounts Payable, Trade ($2,253) ($1,782) Numerator (Sum Total) $3,585 $3,401 Daily Revenue Quarterly Revenue $6,092 $5,497 Number of Days Denominator Average Daily
Slide 35: Reconciliation of Cash Flow Measures
Reconciliation of Cash Flow Measures In Millions 2Q 2004 2Q 2003 1 Cash From Operations Reconciliation Cash From Operations $490 $1,249 Less: Cash Received on Long-term Aluminum Supply Contract — $440 Adjusted Cash From Operations $490 $809 Free Cash Flow Calculation Adjusted Cash From Operations $4