EX-99.2 3 d281588dex992.htm SLIDES PRESENTED DURING ALCOA INC. FOURTH QUARTER 2011 EARNINGS CALL Slides presented during Alcoa Inc. fourth quarter 2011 earnings call
4
th
Quarter Earnings Conference
January 9
th
, 2012
Exhibit 99.2


Cautionary Statement
2
Forward-Looking Statements
This
presentation
contains
statements
that
relate
to
future
events
and
expectations
and
as
such
constitute
forward-looking
statements.
Forward-looking
statements
include
those
containing
such
words
as
“anticipates,”
“estimates,”
“expects,”
“forecasts,”
“intends,”
“outlook,”
“plans,”
“projects,”
“should,”
“targets,”
“will,”
or
other
words
of
similar
meaning.
All
statements
that
reflect
Alcoa’s
expectations,
assumptions,
or
projections
about
the
future
other
than
statements
of
historical
fact
are
forward-looking
statements,
including,
without
limitation,
forecasts
concerning
global
demand
growth
for
aluminum,
end-
market
conditions,
and
growth
opportunities
for
aluminum
in
automotive,
aerospace
and
other
applications,
trend
projections,
targeted
financial
results
or
operating
performance,
and
statements
about
Alcoa’s
strategies,
outlook,
and
business
and
financial
prospects.
Forward-looking
statements
are
subject
to
a
number
of
known
and
unknown
risks,
uncertainties,
and
other
factors
and
are
not
guarantees
of
future
performance.
Important
factors
that
could
cause
actual
results
to
differ
materially
from
those
in
the
forward-looking
statements
include:
(a)
material
adverse
changes
in
aluminum
industry
conditions,
including
global
supply
and
demand
conditions
and
fluctuations
in
London
Metal
Exchange-based
prices
for
primary
aluminum,
alumina,
and
other
products,
and
fluctuations
in
indexed-based
and
spot
prices
for
alumina;
(b)
deterioration
in
global
economic
and
financial
market
conditions
generally;
(c)
unfavorable
changes
in
the
markets
served
by
Alcoa,
including
automotive
and
commercial
transportation,
aerospace,
building
and
construction,
distribution,
packaging,
defense,
and
industrial
gas
turbine;
(d)
the
impact
of
changes
in
foreign
currency
exchange
rates
on
costs
and
results,
particularly
the
Australian
dollar,
Brazilian
real,
Canadian
dollar,
euro,
and
Norwegian
kroner;
(e)
increases
in
energy
costs,
including
electricity,
natural
gas,
and
fuel
oil,
or
the
unavailability
or
interruption
of
energy
supplies;
(f)
increases
in
the
costs
of
other
raw
materials,
including
calcined
petroleum
coke,
caustic
soda,
and
liquid
pitch;
(g)
Alcoa’s
inability
to
achieve
the
level
of
revenue
growth,
cash
generation,
cost
savings,
improvement
in
profitability
and
margins,
fiscal
discipline,
or
strengthening
of
competitiveness
and
operations
(including
moving
its
alumina
refining
and
aluminum
smelting
businesses
down
on
the
industry
cost
curves
and
increasing
revenues
in
its
Flat-Rolled
Products
and
Engineered
Products
and
Solutions
segments)
anticipated
from
its
restructuring
programs
and
productivity
improvement,
cash
sustainability,
and
other
initiatives;
(h)
Alcoa's
inability
to
realize
expected
benefits
from
newly
constructed,
expanded,
or
acquired
facilities
or
from
international
joint
ventures
as
planned
and
by
targeted
completion
dates,
including
the
joint
venture
in
Saudi
Arabia,
the
upstream
operations
in
Brazil,
and
the
investments
in
hydropower
projects
in
Brazil;
(i)
political,
economic,
and
regulatory
risks
in
the
countries
in
which
Alcoa
operates
or
sells
products,
including
unfavorable
changes
in
laws
and
governmental
policies,
civil
unrest,
or
other
events
beyond
Alcoa’s
control;
(j)
the
outcome
of
contingencies,
including
legal
proceedings,
government
investigations,
and
environmental
remediation;
(k)
the
business
or
financial
condition
of
key
customers,
suppliers,
and
business
partners;
(l)
adverse
changes
in
tax
rates
or
benefits;
(m)
adverse
changes
in
discount
rates
or
investment
returns
on
pension
assets;
and
(n)
the
other
risk
factors
summarized
in
Alcoa's
Form
10-K
for
the
year
ended
December
31,
2010
and
other
reports
filed
with
the
Securities
and
Exchange
Commission
(SEC).
Alcoa
disclaims
any
obligation
to
update
publicly
any
forward-looking
statements,
whether
in
response
to
new
information,
future
events
or
otherwise,
except
as
required
by
applicable
law.
Non-GAAP Financial Measures
Some
of
the
information
included
in
this
presentation
is
derived
from
Alcoa’s
consolidated
financial
information
but
is
not
presented
in
Alcoa’s
financial
statements
prepared
in
accordance
with
U.S.
generally
accepted
accounting
principles
(GAAP).
Certain
of
these
data
are
considered
“non-GAAP
financial
measures”
under
SEC
rules.
These
non-GAAP
financial
measures
supplement
our
GAAP
disclosures
and
should
not
be
considered
an
alternative
to
the
GAAP
measure.
Reconciliations
to
the
most
directly
comparable
GAAP
financial
measures
and
management’s
rationale
for
the
use
of
the
non-GAAP
financial
measures
can
be
found
in
the
Appendix
to
this
presentation
and
on
our
website
at
www.alcoa.com
under
the
“Invest”
section.
Any
reference
during
the
discussion
today
to
EBITDA
means
adjusted
EBITDA,
for
which
we
have
provided
calculations
and
reconciliations
in
the
Appendix
and
on
our
website.


Chuck McLane
Executive Vice President and Chief Financial Officer


4
4
th
Quarter 2011 Financial Overview
Loss
from
Continuing
Operations
of
$193
million,
or
$0.18
per
share;
Excluding
impact
of
restructuring
and
other
special
items:
Loss
from
continuing
operations
of
$34
million,
or
$0.03
per
share
Revenue
down
7%
sequentially
and
up
6%
versus
fourth
quarter
2010
Adjusted
EBITDA
of
$445
million
Free
Cash
Flow
of
$656
million
Days
Working
Capital
at
a
record
low
27
days
Debt-to-Capital
at
35%
Net
debt
balance
reduced
by
$547
million,
Cash
on
hand
of
$1.9
billion
Achieved
every
Cash
Sustainability
Target
in
2011
See appendix for reconciliations to GAAP and additional information


5
Income Statement Summary
$ Millions, except per-share amounts
4Q’10
3Q’11
4Q’11
Year
Change
Sequential
Change
Sales
$5,652
$6,419
$5,989
$337
($430)
Cost of Goods Sold
$4,538
$5,290
$5,228
$690
($62)
COGS % Sales
80.3%
82.4%
87.3%
7.0 % pts.
4.9 % pts.
Selling, General Administrative, Other
$282
$261
$268
($14)
$7
SGA % Sales
5.0%
4.1%
4.5%
(0.5 % pts.)
0.4 % pts.
Restructuring and Other Charges
($12)
$9
$232
$244
$223
Effective Tax Rate
16.1%
19.6%
31.0%
14.9 % pts.
11.4 % pts.
Income (Loss) from Continuing Operations
$258
$172
($193)
($451)
($365)
Income (Loss) Per Diluted Share
$0.24
$0.15
($0.18)
($0.42)
($0.33)


6
Restructuring and Other Special Items
$ Millions, except for per-share amounts
4Q’10
3Q’11
4Q’11
Income (Loss) from Continuing Operations
$258
$172
($193)
Income (Loss) Per Diluted Share
$0.24
$0.15
($0.18)
Restructuring Related
$8
($5)
($159)
Discrete Tax Items
$18
$10
($12)
Mark-to-Market Energy Contracts
$9
$13
$8
Australia Asset Sale
-
-
$18
Uninsured Losses
-
($11)
($14)
Special Items
$35
$7
($159)
Income (Loss) from Continuing Ops excl Special Items
$223
$165
($34)
Income (Loss) per Diluted Share excl Special Items
$0.21
$0.15
($0.03)
See appendix for Adjusted Income (Loss) reconciliation


4
th
Quarter 2011 vs. 3
rd
Quarter 2011 Earnings Bridge
7
See appendix for Adjusted Income (Loss) reconciliation
-$125m
+$5m
-$79m
Income (Loss) from Continuing Operations Excluding Restructuring & Other Special Items ($ millions)


Alumina
4Q 10
3Q 11
4Q 11
Production (kmt)
4,119
4,140
4,178
3
rd
Party Shipments (kmt)
2,433
2,256
2,378
3
rd
Party Revenue ($ Millions)
759
879
847
ATOI ($ Millions)
65
154
125
8
4
th
Quarter Results
1
st
Quarter Outlook
4
th
Quarter Business Highlights
Days
working
capital
down
3
days
from
3Q
2011
and 4Q 2010
Performance
gains
more
than
offset
cost
increases
Caustic
inflation
continued
Land
sale
in
Australia
contributed
positively
to
segment ATOI
4
th
Quarter Performance Bridge
See appendix for reconciliations to GAAP and additional information
33%
of
3
rd
party
shipments
on
spot
or
alumina
price
index
Other
pricing
to
follow
two-month
lag
on
LME
Raw
materials
inflation
to
continue
with
$10
million
ATOI
impact
Australian
maintenance
and
overhauls
with
$20
million
ATOI
impact
Productivity
improvements
to
continue


Primary Metals
4Q 10
3Q 11
4Q 11
Production (kmt)
913
964
962
3
rd
Party Shipments (kmt)
743
754
805
3
rd
Party Revenue ($ Millions)
1,970
2,124
1,991
3
rd
Party Price ($/MT)
2,512
2,689
2,374
ATOI ($ Millions)
178
110
(32)
9
4
th
Quarter Results
4
th
Quarter Business Highlights
1
st
Quarter Outlook
Realized
pricing
down
12%
sequentially
Higher
raw
materials
cost,
principally
alumina
Record
days
working
capital,
down
7
days
from
3Q 2011 and 4 days from 4Q 2010
4
th
Quarter Performance Bridge
$ Millions
See appendix for reconciliations to GAAP and additional information
-$115m
+$21m
-$48m
market
performance
cost increases
Pricing
to
follow
15-day
lag
to
LME
Falling
regional
premiums
will
impact
ATOI
by
$20
million
at
current
levels
Seasonal
increases
in
smelting
energy
and
scheduled
maintenance
at
power
plants
for
$25
million
ATOI
impact
Productivity
improvements
continue


10
1
st
Quarter Outlook
4
th
Quarter Business Highlights
4
th
Quarter Results
ATOI  $ Millions
4Q 10
3Q 11
4Q 11
Flat-Rolled Products,
excl Russia, China & Other
55
57
32
Russia, China & Other
(2)
3
(6)
Total ATOI
53
60
26
4
th
Quarter Performance Bridge
Global Rolled Products
See appendix for reconciliations to GAAP and additional information
$ Millions
Seasonal
decline
in
beverage
can
volumes
in
North America and Russia (NA -12%, RUS -23%)
European
market
declined
16%
Aerospace
and
automotive
demand
remain
stable
Productivity
improvements generated $4m
$5m
impact
from
customer
credit
losses
Aerospace
and
automotive
demand
expected
to
remain strong
Productivity
improvements
will
continue
Can
stock
demand
expected
to
recover
from
seasonal low
European
outlook
continues
to
be
weak
Negative
impacts
from
higher
energy
and
transportation costs


$ Millions
4Q 10
3Q 11
4Q 11
3rd
Party Revenue
1,215
1,373
1,355
ATOI
113
138
122
Adjusted EBITDA Margin
17%
18%
16%
Engineered Products and Solutions
11
4
th
Quarter Performance Bridge
4
th
Quarter Business Highlights
4
th
Quarter Results
12%
revenue
growth
year-over-year
and
down
1%
sequentially
8%
improvement
in
ATOI
year-over-year
and
down
12% sequentially
Favorable
productivity
driven
by
process
improvements and procurement savings
Cost
increases
driven
by
Cleveland
press
outage
and
lower yield at certain businesses
Other
non-operational
cost
predominantly
obsolete
inventory
1
st
Quarter Outlook
See appendix for reconciliations to GAAP and additional information
Productivity
gains
quarter-over-quarter
Aerospace
market
remains
strong
Building
&
Construction
market
continuing
to
decline
Commercial
Transportation
market
remains
soft
in
Europe
Share
gains
through
innovation
continue
across
all
market sectors


($ Millions)
4Q’10
3Q’11
4Q’11
Net Income
$292
$225
($163)
DD&A
$371
$377
$368
Change in Working Capital
$569
($93)
$797
Pension Contributions
($43)
($114)
($119)
Taxes / Other Adjustments
$181
$94
$259
Cash from Operations
$1,370
$489
$1,142
Dividends to Shareholders
($31)
($33)
($33)
Change in Debt
($113)
$72
$52
Distributions to Noncontrolling Interest
($102)
($66)
($4)
Contributions from Noncontrolling Interest
$41
$8
$33
Other Financing Activities
$4
($8)
$1
Cash from Financing Activities
($201)
($27)
$49
Capital Expenditures
($365)
($325)
($486)
Other Investing Activities
($109)
($42)
($97)
Cash from Investing Activities
($474)
($367)
($583)
12
4Q’11 FCF
$656 million
$1.9 billion
of cash
Debt-to-Cap
at 35%
DWC at
historical
low in 4Q
2011
See appendix for Free Cash Flow reconciliation
4
th
Quarter 2011 Cash Flow Overview


Solid Performance in a Turbulent Year
13
See appendix for Adjusted EBITDA reconciliations


2011 Actions Compensate for Significant Headwinds
14
See appendix for Adjusted Income reconciliation
Income from Continuing Operations excluding Restructuring & Other Special Items ($ millions)


2011 Cash
from Ops
$2.2 billion
2011 Cash
on Hand
$1.9 billion
($ Millions)
2010
2011
Net Income
$392
$805
DD&A
$1,451
$1,481
Change in Working Capital
$9
($60)
Pension Contributions
($113)
($336)
Taxes / Other Adjustments
$522
$303
Cash from Operations
$2,261
$2,193
Dividends to Shareholders
($125)
($131)
Change in Debt
($675)
$255
Distributions to Noncontrolling Interest
($256)
($257)
Contributions from Noncontrolling Interest
$162
$169
Other Financing Activities
($58)
$26
Cash from Financing Activities
($952)
$62
Capital Expenditures
($1,015)
($1,287)
Other Investing Activities
($257)
($565)
Cash from Investing Activities
($1,272)
($1,852)
15
2010 FCF
$1.2 billion
2011 FCF
$906 million
See appendix for Free Cash Flow reconciliation
Full Year 2011 Cash Flow Overview


Generates
$1.1B Cash
Sustainable Reductions Maintained in Days Working Capital
16
16 Days
Working
Capital
Reduction
4Q
2009
4Q
2010
4Q
2011
4Q
2008
Days Working Capital:  Sustained Improvements


2011 Cash Sustainability Financial Targets and Actual Performance
Alcoa Continues to Meet Our Financial Targets
17
*Target is to be free cash flow positive. See appendix for Free Cash Flow reconciliation


Balance Sheet Is Strong: Alcoa Enters 2012 Managing for Cash
18
See appendix for Free Cash Flow reconciliation


Alcoa Meets Required Funding Status With Cash and Equity
19


Alcoa Enters 2012 Managing for Cash: Cash Sustainability
20
3 Strategic Priorities & Key Levers of Cash Sustainability Program 2012


Working Capital
DWC reduction
Operational Targets
Financial Targets
Swift Action Taken: Improved Cost Structure and Balance Sheet
New Aggressive Targets to Maximize Cash Through 2012
21
Capacity Optimization
Productivity Gains
Cost savings in 2012
Controlled Overhead
Cost savings in 2012
Positive Free Cash Flow
Disciplined Capital Spend
Sustaining Capex
Growth Capex
Saudi Arabia JV
Maintain Capital Structure
Debt-to-Capital Ratio
30-35%
$725M
$625M
$350M
$800M
$50M
1.5 days
531 kmt
closed or
curtailed


Klaus Kleinfeld
Chairman and Chief Executive Officer


2011 YEAR IN REVIEW
23


15%
1%
6%
10%
15%
10%
3%
4%
5.3
3.3
1.8
1.0
0.9
China
Europe
North America
Asia ex. China
Other
India
Brazil
Russia
19.0
6.7
5.7
2011
Forecast
2010 Global Demand
Growth Rate:  13
%
2011 Global Demand
Growth Rate 10% vs. 2010        
(2011 ex China: 7%)
*Other
consists
of:
Middle
East,
Latin
America
ex
Brazil
and
Rest
of
the
World
2011 Projected Primary Aluminum Consumption (mmt) and Growth Rates (%) by Region
Global Demand Remains Strong, 2H11 Experienced Slowdown
43.7
2011 Estimated Consumption
24


Overall Supply/Demand Balance Meets Projections
25
Primary Aluminum
Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI
(000 mt)
China
Rest of World
Supply
17,800
26,000
Demand
(19,000)
(24,650)
Net  Balance
(1,200)
1,350
Alumina
(000 mt)
China
Rest of World
Supply
34,100
52,200
Demand
(34,100)
(52,200)
Net  Balance
0
0
2011 Supply/Demand Balance (in kmt)


Solid Performance in a Turbulent Year
26
See appendix for Adjusted EBITDA reconciliations


Leveraging Our Strategic Growth Investments
Juruti, Brazil –
Bauxite Mine
Sao Luis –
Refinery
Estreito –
Hydro Dam
Strategic Investments: Driving Profitable Growth
27
Saudi Arabia Joint Venture
30% Cash Cost
Reduction
At Nameplate
Capacity
Lowest Cost
Integrated Facility
277 MW
by 2012
On Time
On Budget


GRP Growth Projects Capturing Global Opportunity
28
Russia Grows Profitably
China Positioned For Growth
Davenport Growth
Capacity utilization will reach
70% by 2012
Key domestic supplier into
growing  markets
Positive
EBITDA
in
2011, 
focusing on differentiation
End & Tab Line, Samara
Bohai Flat Rolled Products
Davenport Rolling Mill
$300M investment to meet rising
US auto demand
Capturing 7.5x increase in auto
sheet demand 2011-2020
Growing
capacity
to
support
higher aerospace
build rates
Improving cost position
Improving mix of products
23%
YOY
increase
in
volume
$150 million turnaround
in
Russia profit from 2008


Innovation and Acquisitions Drive EPS Profitable Growth
29
Innovative Solutions
Fastener Acquisitions
Expand global aerospace fastener
footprint
4%
pt
increase
in
EBITDA
margins
4%
-
7%
market
share
gains
across
different product categories
Traco
Most
comprehensive
product
portfolio
in
the
industry
Increased
North
America
commercial
windows
share
gains
by
18%
in
2011
Incremental
revenue
of
$75M
in
2011
Bolt On Acquisitions
>90% of fastening solutions are specialty
fasteners;
55%
patented
or
proprietary
Product
designs
that
provide
solutions:
3D Multi-wall airfoil cooling
Customized cooling
Improves
heat transfer
Higher firing temperature
capability
EcoClean
10,000 sq ft
pollution
reduction
=
80
trees per day
14”
Wide
base
wheels
vs.
dual
steel
wheels:
1,350
lbs
lighter
=
3%
-
5%
fuel
savings


Achieved 2011 Financial Targets
Met Aggressive Targets for Third Consecutive Year
30
Sustaining Capex
Growth Capex
Saudi Arabia JV
Debt to Capital
Free Cash Flow
Target: $1.0b
Actual: $924m
Target: $500m
Actual: $363m
Target: $400m
Actual: $249m
Target: 30-35%
Actual: 35%
Target: $0
Actual: $906m


2012 OUTLOOK
31


2012 Market Conditions
32
32
Alcoa End Markets: Current Assessment of 2012 vs. 2011
Source: Alcoa analysis


0%
6%
3%
2012
15%
12%
1%
3%
10%
10%
5%
9%
10%
4%
4%
2011
5%
China
Europe
North America
Asia ex. China
Other
India
Brazil
Russia
21.3
6.7
5.9
5.8
3.4
1.9
1.0
0.9
2011 Forecast
2012 Forecast
2011 Global Demand
Growth Rate:  10
%
2012 Global Demand
Growth Rate 7% vs. 2011   
(2012 ex China: 4 %)
*Other consists of: Middle East, Latin America ex Brazil and ROW
2012 Projected Primary Aluminum Consumption (mmt) Growth Rates (%) by Region
2012 Demand Growth Continues, But at a Slower Pace
47.0
2012 Estimated Consumption
33
15%


Inventories 4 Days Higher Year-on-Year
Premiums Off Highs But Strong Historically
Premiums Decline But Remain Strong, Inventory Increases
34
$112 /MT
$170 /MT
$163 /MT
Source: Alcoa estimates, LME, SHFE, IAI, Marubeni, Platt’s Metals Week and Metal Bulletin
LME at
40 days
Non-LME at
17 days
Global
Inventories
Rose 4 days vs.
3Q’11
57 days of
consumption
Regional Premiums and Aluminum Inventories


Demand
Slowdown,
Shift
in
Ownership
Increases
LME
Inventories
35
Off-warrant
China
Japan Port
Producer-held
LME on-warrant
Total Global Inventories (mmt)
Source: Alcoa analysis
9.4
9.8


2012
Primary Aluminum
Moves into Deficit,
Alumina Balanced
36
Primary Aluminum
Source: Alcoa estimates, Brook Hunt, CRU, CNIA, IAI
(000 mt)
China
Rest of World
2011 Production Run Rate
17,800
26,000
2012 Production Additions
3,750
700
2012 Capacity Curtailments
(1,100)
(700)
Total Supply
20,450
26,000
Demand
(21,300)
(25,750)
Net  Balance
(850)
250
Alumina
(000 mt)
China
Rest of World
Supply
36,700
57,200
Demand
(39,200)
(54,700)
Net  Balance
(2,500)
2,500
Import/(Exports)
2,500
(2,500)
Net  Balance
0
0
2012E Supply/Demand Balance (in kmt)


Chinese Primary Metal Production by
Full Operating Cost (million, tonnes)
Unprofitable Smelter Production by
Province (million, tonnes)
Estimate More Than 1/3 of Chinese Smelters Operating
Under Water at End of 2011
* 17% VAT inclusive in the price and cost
** Full operating cost excludes depreciation and capital charge
37
Source: CRU, AMM, Aladdiny, Alcoa analysis
Henan
Guizhou
Yunnan
Sichuan
Shandong
Guangxi
Shaanxi
Liaoning
Zhejiang
Unprofitable
Costs At Or Above
SHFE $2,400
5.7MnT, 32%
Profitable
Costs Below
SHFE $2,400
12.1MnT, 68%


Aluminum Continues to Be an Attractive Asset Class
Sources: Bloomberg, Dow UBS, Reuters, Marketwatch
38
Asset  Allocation By Commodity Sector
Dow UBS Commodity Index $90B
Composition of Base Metal Sector


Macro Environment Putting Downward Pressure on Prices
39
Sources:
Bloomberg,
*Confidence
figures
set
at
100
in
January
2011
for
comparability
;
1
EC
Commission
EU
Confidence,
2
National
Bureau
of
Statistics
China
Consumer
Confidence,
3
University
of
Michigan
Consumer
Sentiment
.
PMI:
Institute
for
Supply
Management
,
Markit,
China
Federation
of
Logistics
&
Purchasing


Combination of Factors Signals Likely Pricing Rebound
7%
global
aluminum
demand
growth
in
2012
Primary
aluminum
balance
moves
to
deficit
Aluminum
continues
to
be
an
attractive
asset
class
Macro economic indicators
showing positive signals
40


Taking Decisive Action With Cash Sustainability Program
41
3 Strategic Priorities & Key Levers of Cash Sustainability Program 2012


Maximize cash position
for ramp down and ramp
up, considering:
Operational flexibility
Power flexibility
Repowering impact
Community impact
Smelting:
Utilize
material in
inventory to
reline,
but
do
not
restart pots
Targeted smaller
curtailments
based upon cost
& strategic
situation
Full curtailment
of selected plants
Permanent
shutdowns
of
selected plants
Curtailment Steps
Production Curtailments: Tiered Approach
Guiding Principle
Curtailments Improve Cost Position and Competitiveness
42
Portovesme
Dependent on
business
conditions
Tennessee
Rockdale (2 lines)
Curtailment:
5%
Shutdown:
7%
Refinery output matched to curtailments and market conditions
La Coruña
Avilés


Working Capital
DWC reduction
Operational Targets
Financial Targets
Swift Action Taken: Improved Cost Structure and Balance Sheet
New Aggressive Targets to Maximize Cash Through 2012
43
Capacity Optimization
Productivity Gains
Cost savings in 2012
Controlled Overhead
Cost savings in 2012
Positive Free Cash Flow
Disciplined Capital Spend
Sustaining Capex
Growth Capex
Saudi Arabia JV
Maintain Capital Structure
Debt to Capital Ratio
30-35%
$725M
$625M
$350M
$800M
$50M
1.5 days
531 kmt
closed or
curtailed



Additional Information
Kelly Pasterick
Director, Investor Relations
Alcoa
390 Park Avenue
New York, NY 10022-4608
Telephone:  (212) 836-2674
www.alcoa.com
45


Annual Sensitivity Summary
46
Currency Annual Net Income Sensitivity
+/-
$100/MT = +/-
$220 million
LME Aluminum Annual Net Income Sensitivity
Australian $
+/-
$11 million
per 0.01 change in USD / AUD
Brazilian $
+/-
$  3 million
per 0.01 change in BRL / USD
Euro €
+/-
$  2 million
per 0.01 change in USD / EUR
Canadian $
+/-
$  5 million
per 0.01 change in CAD / USD
Norwegian Kroner
+/-
$  5 million
per 0.10 change in NOK / USD


Reconciliation of Effective Tax Rate
47
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.
($ in millions)
4Q’11
2011
(Loss) income from continuing operations before income taxes
($239)
$1,063
(Benefit) provision for income taxes
($74)
$255
Effective tax rate as reported
31.0%
24.0%
Discrete tax charges (benefits)
$11
($2)
(Benefit) provision for income taxes excluding discrete tax items
($85)
$257
Effective tax rate excluding discrete tax items
35.6%
24.2%


Revenue Change by Market
5%
(2%)
(15%)
(8%)
(15%)
1%
(17%)
(7%)
(4%)
(6%)
21%
22%
(7%)
30%
2%
(6%)
2%
(8%)
12%
1%
4Q’11 Third-Party Revenue
Sequential
Change
Year-Over-Year
Change
48


Reconciliation of ATOI to Consolidated Net Income
(Loss) Attributable to Alcoa
(in millions)
4Q10
2010
1Q11
2Q11
3Q11
4Q11
2011
   Total segment ATOI
$    
409
$  1,424 
$    
555 
$    
635 
$    
462
$    
241
1,893
   Unallocated amounts (net of tax):
      Impact of LIFO
3
(16)
(24)
(27)
2
11
(38)
      Interest expense
(76)
(321)
(72)
(106)
(81)
(81)
(340)
      Noncontrolling interests
(34)
(138)
(58)
(55)
(53)
(28)
(194)
      Corporate expense
(94)
(291)
(67)
(76)
(76)
(71)
(290)
      Restructuring and other charges
8
(134)
(6)
(22)
(7)
(161)
(196)
      Discontinued operations
(8)
(1)
(4)
2
(3)
      Other
42
(262)
(19)
(23)
(75)
(104)
(221)
   Consolidated net income (loss) attributable to
Alcoa
$     258
$     254
$     308
$     322
$     172
$    (191)
$     611
49


Reconciliation of Adjusted Income
50


Reconciliation of Free Cash Flow
51
(in millions)
Quarter ended
Year ended
December 31, 
2010
September 30, 
2011
December 31, 
2011
December 31, 
2008
December 31, 
2009
December 31, 
2010
December 31, 
2011
Cash provided from
operations
$ 1,370
$    489
$ 1,142
$ 1,234
$ 1,365
$ 2,261
$ 2,193
Capital expenditures
    (365)
   
(325)
   
(486)
(3,438)
(1,622)
(1,015)
(1,287)
Free cash flow
$ 1,005
$    164
$    656
$(2,204)
$   (257)
$ 1,246
$    906
Free Cash Flow is a non-GAAP financial measure.  Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations
after taking into consideration capital expenditures due to the fact that these expenditures are considered necessary to maintain and expand Alcoa’s asset base and are expected to generate
future cash flows from operations.  It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary
expenditures, such as mandatory debt service requirements, are not deducted from the measure. 


Reconciliation of Alcoa Adjusted EBITDA
52


Reconciliation of Alumina Adjusted EBITDA
53


Reconciliation of Primary Metals Adjusted
EBITDA
54


Reconciliation of Flat-Rolled Products Adjusted EBITDA
55


Reconciliation of Engineered Products and Solutions
Adjusted EBITDA
56


Reconciliation of Net Debt
57
(in millions)
Quarter ended
December 31, 
2008
September 30, 
2011
December 31, 
2011
Short-term borrowings
$    478
$      57
$      62
Commercial paper
1,535
107
224
Long-term debt due within
one year
      
56
      
489
      
445
Long-term debt, less amount
due within one year
      
  8,509
      
  8,658
      
  8,640
Total debt
  10,578
  9,311
  9,371
Less: Cash and cash
equivalents
     762
  1,332
  1,939
Net debt
$ 9,816
$ 7,979
$ 7,432
Net debt is a non-GAAP financial measure.  Management believes that this measure is meaningful to
investors because management assesses Alcoa’s leverage position after factoring in available cash
that could be used to repay outstanding debt.