Howmet Aerospace (HWM) 8-K AA - Q4 2008 ALCOA Inc Earnings Conference Call

[Alcoa logo]

January 12, 2009

4

th

Quarter 2008 Analyst Conference

Exhibit 99.2

[Alcoa

logo]

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

actions

may

differ

materially

from

those

projected

in

the

forward-looking statements.  For a summary of the specific risk

factors that could cause results to differ materially from those

expressed in the forward-looking statements, please refer to

Alcoa’s Form 10-K for the year ended December 31, 2007 and

Forms 10-Q for the quarters ended March 31, 2008, June 30, 2008

and September 30, 2008  and other reports filed with the Securities

and Exchange Commission.

2

[Alcoa logo]

Executive Vice President and Chief Financial Officer

Chuck McLane

[Alcoa

logo]

4th Quarter 2008 Financial Overview

–

Loss from continuing operations of $929m or $1.16 per share

•

Restructuring, impairment and other special items of $708m or

$0.88 per share

–

Revenue of $5.7 billion, down 18%

–

Sequential metal price reduction of 35%

–

Significant market deterioration

–

Cash from operations of $608m

–

Cash on hand at $762m

–

Incremental bank facility of $1.9b

–

Trailing 12-month ROC stands at 6.7%, excluding growth

investments and restructuring charges

4

[Alcoa

logo]

Sequential Income Statement

In Millions

3Q'08

4Q'08

Change

Sales

$6,970

$5,688

(18%)

Cost of Goods Sold

$5,648

$5,277

(7%)

   % of Sales

81.0%

92.8%

11.8 pts

SG&A

$275

$273

(1%)

   % of Sales

3.9%

4.8%

0.9 pts

Restructuring and Other Charges

$38

$863

nm

Interest Expense

$96

$125

30%

Other Expense/(Income)

$15

$(36)

nm

Effective Tax Rate

25.9%

20.4%

(5.5 pts)

Minority Interests

$84

-

(100%)

GAAP Net Income/(Loss)

$268

($1,191)

($1,459)

Loss from Discontinued Operations

($38)

($262)

($224)

GAAP Income/(Loss) from Continuing Operations

$306

($929)

($1,235)

GAAP Income/(Loss) from Continuing Operations

per Diluted Share

$0.37

($1.16)

($1.53)

5

[Alcoa

logo]

Restructuring & Other Special Items

After-Tax

Earnings

Income Statement

Amount

Per Share

Classification

Segment

Loss from Continuing Operations

($929)

($1.16)

Restructuring:

Headcount

($97)

($0.12)

Restructuring

Corporate

Global Foil

(100)

(0.13)

Restructuring

Corporate

Europe Auto Structures

(50)

(0.06)

Restructuring

Corporate

Sapa Exchange

(223)

(0.28)

Restructuring

Corporate

Other Asset Write-offs

(144)

(0.18)

Restructuring

Corporate

Restructuring Sub-Total

($614)

($0.76)

Other Special Items:

Shutdown Related Obsolete Inventory

($16)

($0.02)

COGS

Flat-Rolled/Engineered Products

Environmental Reserve

(26)

(0.03)

COGS

Corporate

Accounts Receivable Reserve

(11)

(0.02)

SG&A

Corporate

Non-Cash Tax on Repatriated Earnings

(65)

(0.08)

Tax

Corporate

Refund of Indemnification Payment

24

0.03

Other Income

Corporate

Other Special Items Sub-Total

($94)

($0.12)

Total Restructuring & Other Special Items

($708)

($0.88)

6

[Alcoa

logo]

Minority

After-Tax

4th Quarter 2008

Pre-Tax

Tax $

Tax %

Interest

& M.I.

Reported Effective Tax Rate

($1,167)

($238)

20.4%

$0

($929)

Adjustments

Restructuring

($863)

($226)

26.2%

($23)

($614)

Non-Cash Tax on Repatriated Earnings

65

(65)

Adjustments Sub-Total

($863)

($161)

18.7%

($23)

($679)

Operational Effective Tax Rate

($304)

($77)

25.3%

$23

($250)

Total Year 2008

Reported Effective Tax Rate

$792

$342

43.2%

$221

$229

Adjustments

Restructuring

($939)

($246)

26.2%

($23)

($670)

Non-Cash Tax on Repatriated Earnings

65

(65)

Other Discrete Tax Items

33

(33)

Adjustments Sub-Total

($939)

($148)

15.8%

($23)

($768)

Operational Effective Tax Rate

$1,731

$490

28.3%

$244

$997

2008 Tax Reconciliation –

4

th

Quarter & Full Year

7

[Alcoa

logo]

4Q vs. 3Q 2008 Earnings Bridge

Income From Continuing Operations Excluding Restructuring & Other Special Items

4Q 2008 Other Special Items = Obsolete Inventory, Environmental Reserve, A/R Reserve, Non-Cash

Tax on Repatriated Earnings and Refund of Indemnification Payment (net $94m in total)

See Slide 42 for Reconciliation

$331

$560

($221)

$339

$164

$88

$191

$69

($300)

($200)

($100)

$0

$100

$200

$300

$400

$500

$600

$700

3Q08

Energy

Currency

Price/Mix

Volume

LME

4Q08

8

[Alcoa

logo]

4Q 08

3Q 08

4Q 07

2,123

2,010

2,030

3

rd

Party Shipments (kmt)

3,776

3,790

3,855

Production (kmt)

722

805

688

3

rd

Party Revenue ($ million)

162

206

205

ATOI ($ million)

16% lower realized pricing

Point Comfort curtailment led to lower

production

Sequential benefit of $33 million from Western

Australia gas disruption recovery

Stronger US dollar benefit of $64 million

through lower cost base

Lower energy costs realized

Alumina

4

th

Quarter Highlights

1

st

Quarter Outlook

Prices to follow approximate two-month lag

Anticipate 5% lower production due to

curtailments

Current US dollar slightly weaker than 4Q

average

Lower fuel oil costs

4

th

Quarter Business Conditions

$50

$100

$150

$200

$250

$300

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q08

4Q08

$0

$300

$600

$900

$1,200

$1,500

$1,800

ATOI

Total Revenue

9

[Alcoa

logo]

Refining Cost Overview

Composition of Refining Production Costs

Pricing convention

Inventory flow

Input Cost

6 -

9 month lag

2 -

3 months

Bauxite

Spot & semi-

annual

3 -

6 months

Caustic soda

Rolling 16 quarters

1 –

2 months

Natural gas

Prior month

1 –

2 months

Fuel oil

Fuel Oil

14%

Natural gas

15%

Caustic

10%

Bauxite

25%

Conversion

36%

10

[Alcoa

logo]

4

th

Quarter Highlights

(101)

297

196

ATOI ($ million)

2,125

2,945

2,646

3

rd

Party Price ($/mt)

1,580

2,127

1,597

3

rd

Party Revenue ($ million)

4Q 08

3Q 08

4Q 07

807

704

624

3

rd

Party Shipments (kmt)

971

1,011

959

Production (kmt)

Primary Metals

1

st

Quarter Outlook

4

th

Quarter Business Conditions

Realized pricing down 28% sequentially

LME-linked costs declining but on lagged

basis

Stronger US dollar benefit of $94 million

through lower cost base

Sequential negative $21 million impact of

Rockdale curtailment

Favorable sequential energy of $23 million

Realized pricing trending closer to spot

Anticipate 8% lower production due to

curtailments

LME linked costs to continue decline

Current US dollar slightly weaker than 4Q

average

Cost savings from procurement actions on

carbon products start to hit bottom line

11

-$250

-$150

-$50

$50

$150

$250

$350

$450

$550

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q08

4Q08

$1,350

$1,850

$2,350

$2,850

$3,350

$3,850

ATOI

Total Revenue

[Alcoa

logo]

Smelting Cost Overview

Pricing convention

Inventory flow

Input Cost

1 –

3 month lag

1 -

2 months

Materials

Spot & semi-annual

1 -

2 months

Carbon

40% LME linked –

3 month lag

1 –

2 months

Power

2 –

3 month lags

1 –

2 months

Alumina

Several significant input costs lag average primary metal revenue by up to 3 months

12

[Alcoa

logo]

Flat-Rolled Products

1

st

Quarter Outlook

4

th

Quarter Business Conditions

(97)

(38)

(67)

Russia, China & Other

29

7

60

3Q 08

Total

Hard Alloy Extrusions                   8

Global Rolled Products,

excl Russia & China

(15)

44

4Q 07

(98)

8

(9)

4Q 08

ATOI ($ million)

Continued weakness in end markets

Input costs expected to decline

Sharp decline in demand as economic

environment worsened

11% lower shipments on top of a seasonally

weak 3Q

Non can sheet shipments down 20%

Boeing strike impact of $10 million

Bohai

start-up costs of $9 million

Divestiture related inventory obsolescence

$12 million

($120)

($80)

($40)

$0

$40

$80

$120

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q08

4Q08

$1,600

$1,800

$2,000

$2,200

$2,400

$2,600

$2,800

ATOI

Third Party Revenue

13

[Alcoa

logo]

Global Rolling Demand Collapse

•

2008 demand well below 2007

•

No sign of seasonal up-lift

•

Dramatic deterioration in 4Q

orders over the last 3 weeks

Downturn Evident in Flat-Rolled Products

14

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2007

2008

Global Rolling Order Rates 2008 & 2007

[Alcoa

logo]

Flat-Rolled Products Market Drivers

+7%

-

37%

-

11%

-

26%

-

18%

-

36%

-

23%

Total -17%

Revenue Composition

Sequential

Revenue Change

15

[Alcoa

logo]

Engineered Products and Solutions

5.2

9.2

5.9

ATOI% / Revenue

133

1,451

3Q 08

ATOI

Third Party Revenue

77

1,311

4Q 07

65

1,258

4Q 08

Market declines adversely affected all

businesses

Boeing strike ($5 million effect) & seasonal

impacts resulted in lower aerospace demand

4

th

Quarter Highlights

4

th

Quarter Business Conditions

1

st

Quarter Outlook

Further weakness expected in commercial

transportation and commercial construction markets

Revenue from automotive market reduced to 5% of

total segment as a result of portfolio moves

Productivity initiatives expected to gain momentum

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

1Q 07

2Q 07

3Q 07

4Q 07

1Q 08

2Q 08

3Q08

4Q08

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

ATOI

Third Party Revenue

16

[Alcoa

logo]

Record earnings despite market headwinds

Cost efficient capacity

expansions

in

fasteners

and investment castings

along with

working capital

efficiencies

Strong market positions

in aerospace, IGT, B&C

and fastener acquisition

offset

unprecedented

decline in North American

& European truck and

automotive markets

Productivity

improvements

continue to accelerate and

yield bottom line benefits

Return on Capital

Sales (in billions)

7%

ATOI

(in millions)

23%

16%

Engineered Products & Solutions Financial Metrics

$5.3

$5.6

2007

2008

$409

$503

2007

2008

2007

2008

17

[Alcoa

logo]

Cash Flow Statement

In Millions

4Q'07

3Q'08

4Q'08

Net Income

$632

$268

$(1,191)

DD&A

312

311

292

Change in Working Capital

385

(552)

590

Other Adjustments

(661)

298

955

Pension Contributions

(25)

(418)

(38)

Cash From Operating Activities

$643

$(93)

$608

Dividends to Shareholders

$(143)

$(140)

$(136)

Change in Debt

467

1,573

444

Dividends to Minority Interests

(58)

(76)

(102)

Contributions from Minority Interests

105

130

214

Share Repurchases

(948)

(477)

-

Share Issuances

16

1

-

Other Financing Activities

2

(7)

(43)

Cash From Financing Activities

$(559)

$1,004

$377

Capital Expenditures

$(1,021)

$(877)

$(1,017)

Sales of Assets/Investments

126

115

26

Additions to Investments

(8)

(39)

(27)

Other Investing Activities

(16)

(56)

(5)

Cash From Investing Activities

$(919)

$(857)

$(1,023)

18

[Alcoa

logo]

Capital Expenditures

Capital Expenditure History

2009 Capital Expenditures Forecast

Values $ Millions

Values $ Millions

71%

29%

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

FY06

FY07

FY08

FY09

0%

50%

100%

150%

Total Capital Expenditures

Non-Growth Capex as % of Depreciation

393

328

876

187

$0

$500

$1,000

$1,500

2009 First Half

2009 Second Half

Non-Growth

Growth

19

[Alcoa

logo]

59%

87%

96%

33%

43%

34%

October

November

December

Alcoa

Tier II Issuers

Liquidity Remains Strong

Added revolver amid financial market crisis

Good performance in difficult CP markets

Values $ Billions

Source:  The Federal Reserve Board

% of Period Issuance with Maturity One Week or Greater

1.5

1.2

1.2

1.5

5.2

3.3

3.3

3.3

1Q 08

2Q 08

3Q 08

4Q 08

Commercial Paper

Additional Revolver Availability

20

[Alcoa

logo]

Cash Conservation Efforts

Wide-Ranging

Actions

Taken

21

[Alcoa

logo]

President and Chief Executive Officer

Klaus Kleinfeld

[Alcoa

logo]

Accomplishments: Clear strategy, speed & execution

2008 Accomplishments

Secured long-term power contracts for

nearly half of smelting system

Completed

successful

start-up

of

Fjardaal,

first

greenfield

smelter

in

two

decades

Record earnings in Engineered

Products & Solutions

Completed Packaging divestiture

Fast

response

to

early

signals,

e.g.:

Reached agreement for soft alloy

extrusion swap

Increased debt capacity and

improved debt structure

Named to Dow Jones Sustainability

Index

for

7

straight

year

Three Strategic Priorities

23

Disciplined

Execution

across all activities

Alcoa Advantage

creating value for

all businesses

–

Talent

–

Technology

–

Customer Intimacy

–

Purchasing

–

Operating System

Profitable

Growth

in every business

Business Programs

define:

–3-year aspirations

–Priority levers

–Accountability

Disciplined

Execution

across all activities

Alcoa Advantage

creating value for

all businesses

–

Talent

–

Technology

–

Customer Intimacy

–

Purchasing

–

Operating System

Profitable

Growth

in every business

Business Programs

that

define:

–3-year aspirations

–Priority levers

–Accountability

th

[Alcoa

logo]

Historic collapse in metal price –

(56%) over 5 months

LME

cash

price/ton,

in

US$

and

global

inventory

1

,

in

days

Reported Stocks,

Days of Consumption

LME Cash Price

1

Reported Stocks : Comex, IAI, Japan Port , LME, & SME

0

5

10

15

20

25

30

35

40

45

50

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

-

56%

0

5

10

15

20

25

30

35

40

45

50

0

5

10

15

20

25

30

35

40

45

50

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

-

56%

24

Source: IAI and Bloomberg

[Alcoa

logo]

Expect global demand decline of 2% in 2009

Source: Alcoa analysis

Note: 2009 Projected Global Consumption: 36.2 million mt

Asia w/o China

North America

2008 Actual

2009 Forecast

Global Demand Growth Rates:

2008:  -3%

2009:  -2%

Brazil

China

CIS

Europe

2009 Projected

Consumption

5%

1%

3%

-2%

-7%

-4%

9%

-12%

-9%

-2%

-10%

2008 vs. 2009

Projected Growth Rates

3%

Primary Aluminum Consumption Growth Rates, 2009, in million mt

0.9

1.0

4.9

5.3

7.0

13.1

0.9

1.0

4.9

5.3

7.0

13.1

25

[Alcoa

logo]

Curtailment announcements –

13% of global output

Global

Smelting

Curtailment

Announcements

1

15%

(840)

5,700

North America

Region

Aug 08

Production¹

Announced

Curtailment¹

Percentage

Curtailed

China

14,000

(3,000)

21%

Eastern

Europe/Russia

4,650

(574)

12%

Western Europe

4,600

(230)

5%

Asia/Middle East

3,950

(80)

2%

Latin America

2,700

(93)

3%

Oceania

2,300

(102)

4%

Africa

1,700

(100)

6%

Total

39,600

(5,020)

13%

1,442

Sep

2008

& Prev

5,020

1,139

679

By Month

Oct

2008

Nov

2008

Dec

2008

Jan

2009

Total

840

920

1

Annualized kmt

By Region

13% of total

global output

800

completed

26

[Alcoa

logo]

2009 –

Aluminum Surplus or Deficit?

Supply

Demand

2008 Production

38,800

Estimated 2009

incremental production

600

Announced curtailments

(3,500)

Total 2009 Production

35,900

2008 Consumption

37,000

Lower 2009 consumption

(2%)

(800)

Stimulus effects

??

Total 2009 Consumption

??

Aluminum Supply / Demand Balance (in kmt)

Source: Alcoa analysis, CRU, IAI

27

[Alcoa

logo]

Managing downturn along the three strategic priorities

Three Strategic Priorities and Downturn Management

Disciplined

Execution

across all activities

Alcoa Advantage

creating value for

all businesses

–

Talent

–

Technology

–

Customer Intimacy

–

Purchasing

–

Operating System

Profitable

Growth

in every business

Business Programs

that

define:

–

3-year aspirations

–

Priority levers

–

Accountability

Disciplined

Execution

across all activities

Alcoa Advantage

creating value for

all businesses

–

Talent

–

Technology

–

Customer Intimacy

–

Purchasing

–

Operating System

Profitable

Growth

in every business

Business Programs

that

define:

–

3-year aspirations

–

Priority levers

–

Accountability

Accelerated

portfolio

moves (in &

out)

Curtailments

Plant shut

downs

Headcount

reduction

Additional

flexibility

R&D

technology

refocus

Share growth

Procurement

savings

Corporate

overhead

reduction

Increased

debt capacity

Speedy execution

Focus on cash and bottom line

Capital spend reduction

T  U  R  N            M  A  N  A  G

28

[Alcoa

logo]

Getting ahead of the curve 

2008/09 Alcoa Downturn Actions

Jul 11

Downsized

Electrical

and

Electronic

Solutions

Honduran &

Mexican

operations

Sep 30

Curtailed

150,000 mt

at Rockdale

smelter

Oct 7

Announced

halting of

all

non-critical

capital

spend

Oct 23

Reduced

production

at Point

Comfort

refinery

by 25%

(550,000 mt)

Nov 10

Curtailed

additional

350,000 mt

aluminum

production

over global

smelting

system

Jan 6, 2009

Announced  

wide-ranging

actions

to

address

economic

downturn

Sep 17

Suspended

share

repurchases

Oct 6

Power &

Propulsion

announced

headcount

reductions

in response

to market

conditions

Dec 22

Agreement

with Orkla

to

swap

soft

alloy

extrusion

share

for Elkem

smelter

share

Alcoa Downturn Actions: Timeline

29

[Alcoa

logo]

Portfolio

Streamlining

Production

Curtailments

Cost &

Procurement

Efficiencies

Liquidity

Initiatives

Suspend share

repurchases

Limit capital

spending

Comply with law

Fulfill customer

requirements

Complete

Brazilian growth

Secured additional

credit facility

Restructuring actions incorporate all improvement levers

Initiate smelting

curtailments

totaling 750 kmt

Adjust refining

capacity downward

by 1.5 million mt

per year

Workforce reduction

13,500

headcount

1,700

contractors

Global salary &

hiring freeze

Procurement

actions on key

inputs

Continued success

on repowering

smelting assets

1.9 million mt

Extensions as

long as 2043

Swap of Sapa stake

for Elkem

smelters

Divest four mid &

downstream

businesses

Electrical &

Electronic

Solutions

Global Foil

Cast Auto

Wheels

Transportation

Products Europe

Restructuring Announcement –

January 6, 2009

Restructuring Announcement: Levers and Actions

30

[Alcoa

logo]

Gaining upstream strength through cash-free swap

Elkem

Aluminium

Sapa JV

Equity Swap

46 plants

North America and Europe

Major customer segments:

–

Building and construction

–

Industrial

–

Commercial transportation

Sapa JV

Soft Alloy Extrusions

Elkem

Aluminium

Norway Smelters

Alcoa

Orkla

Alcoa

Orkla

Lista

and Mosjoen

smelters (282 kmt)

18% of new Mosjoen

anode plant (Alcoa

owns the remaining 82%)

LME-linked power (mostly hydro) to 2019

Both smelters are middle of cost curve

45.45%

54.55%

50%

50%

Current

Ownership

Current

Ownership

Complete

planned

exit

of

soft

alloy

extrusions

in

difficult

market

Building

out

leading

upstream

position

through

adding

quality

assets

(e.g.,

hydro-based)

(operator)

(operator)

BENEFITS

Portfolio

Streamlining:

Sapa

/

Elkem

Swap

31

[Alcoa

logo]

18% (750 kmt)

reduction

by end 1Q 09

Smelting curtailments taken to maximize cash position

Maximize cash position

for ramp down and ramp

up, considering:

•Operational flexibility

•Power flexibility

•Repowering impact

•Community impact

Reduce amperage

and eliminate end

pots

Utilize material in

inventory to reline,

but do not restart

pots

Targeted smaller

curtailments at

several locations

based upon cost

& strategic

situation

Full curtailment of

selected plant(s)

Smelting Curtailment Steps

7 plants*

10 plants*

Intalco*

Baie

Comeau*

Pocos

**

Rockdale*

Tennessee**

Smelting Production Curtailments: Tiered Approach

Guiding Principle

* Completed

** In process

32

[Alcoa

logo]

Increase labor and materials productivity

Labor Initiatives

Procurement Initiatives

Alumina & Primary

2,300

Flat Rolled Products

2,900

Engineered Products

& Solutions

8,100

Corporate

200

Total

13,500

•Supply chain management

Utilizing Alcoa’s global presence

and logistics expertise, demonstrate

ability to employ non-traditional 

sourcing

from numerous

geographies –

e.g., coke & caustic

•Change of specifications, e.g.,

•

Coke

•

Cathodes

•

Backward integration

•

Agreements reached covering

•

Fluoride

•

Caustic

•

Coke

Headcount reductions

•

Reduce 1,700 contractor positions

•

Global salary and hiring freeze

20% reduction

vs

late 2008

market levels

Cost & Procurement Efficiencies: Initiatives

33

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logo]

Decreased capital spending and increased debt capacity

Commercial

Paper

balance

Credit

Revolver

availability

1Q 08

2Q 08

3Q 08

4Q 08

Capital Spending ($ millions)

Debt Maturities ($ millions)

Commercial Paper & Debt Capacity ($ billions)

99% of LT Debt

maturities

beyond 2009

2

half

$0.5b

1

half

$1.3b

Liquidity Initiatives: Results

-50%

$0

$1

$2

$3

$4

$5

$6

$1.5

$1.2

$1.2

$1.5

$3.3

$3.3

$3.3

$5.2

$0

$1

$2

$3

$4

$5

$6

$1.5

$1.2

$1.2

$1.5

$3.3

$3.3

$3.3

$5.2

34

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

st

nd

[Alcoa

logo]

Reaping substantial benefits

Portfolio

Streamlining

Production

Curtailments

Cost &

Procurement

Efficiencies

Liquidity Initiatives

Restructuring Announcement –

January 6, 2009

Restructuring Announcement: Benefits of Actions

Benefits of Actions

•

25%

lower

cost

per

ton

in

refining

&

smelting

(1Q

09

vs

3Q

08),

e.g.,

•

$1.3 billion annualized from procurement & energy

•

Headcount reductions

•

Improved overall cost position from curtailments

•

$450 million before tax annualized benefit comprised of:

•

$150 million from divested businesses

•

$200 million from mid/downstream & corporate headcount reductions

•

$100 million from upstream headcount reductions

•

Cash-free swap of soft alloy extrusion

•

Expected $100 million proceeds from divestiture of four businesses

•

Increase of nearly 60% in short-term debt capacity

•

Cash preservation through 50% lower capital spending

35

[Alcoa

logo]

Environment

•

Total energy consumption to

increase by 54% until 2025 –

>60% from developing

countries

•

Person Transport rates +40%

by 2030

Aluminum prospects remain bright

Light

Weight

High

Strength

Durable

Highly

Conductive

Non-

Corrosive

Malleable

Recyclable

Relative

Price

37

70

2008

2018

Demographics

Urbanization

Aluminum Benefits

Aluminum

Demand

(million

mt)

1

Mega Trends

Global population

•

2006:  6.6 billion

•

2025:  7.9 billion

•

2050:  9.1 billion

6% CAGR

Aluminum Outlook

Population living in cities

•

2006:  > 50%

•

2030:  > 60%

1

Source: Alcoa analysis

36

[Alcoa

logo]

…

…

…

Alcoa 25th

Alcoa is well-positioned for the future

Worst

Best

…

…

Alcoa 30th

…

Current

Post Juruti/Sao Luis

World class refining system

Outstanding power position

Bauxite Mining

#1

Refining

#1

Smelting Capacity

#1

End & Tab Can Sheet

#1

Can Body Stock

#2

Aerospace Sheet & Plate

#1

Hard Alloy Extrusions –

Advanced

#1

General Engineering Plate

#1

Aerospace Fastener Systems

#1

Aerospace Airfoils

#1

IGT Airfoils

#1

Aluminum Structural Forgings

#1

Aluminum Truck Wheels

#1

Commercial Building Systems (NA)

#1

Refining Cost Position

World leading businesses

Alcoa’s Competitive & Power Position

Above businesses account for 90% of

Alcoa’s overall revenue

Contracted power

and MOUs

Self-generated power

Repowering

efforts 2009 -

2012

Contracted power

and MOUs

Self-generated power

Repowering

efforts 2009 -

2012

37

[Alcoa

logo]

Greg Aschman

Director, Investor Relations

Alcoa

390 Park Avenue

New York, N.Y. 10022-4608

Telephone:  (212) 836-2674

Facsimile:  (212) 836-2813

www.alcoa.com

For Additional Information, Contact:

38

[Alcoa

logo]

39

[Alcoa logo]

[Alcoa

logo]

APPENDIX

40

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Reconciliation of Return on Capital

41

Bloomberg Return on Capital (1)

Bloomberg Return on Capital,

Excluding Growth Investments (1)

Year ended

Year ended

December 31,

December 31,

2008

2008

Net income

(loss)

$         (74)

Net income

(loss)

$         (74)

Minority interests

221

Minority interests

221

Interest expense

Interest expense

(after tax)

231

(after tax)

231

Numerator

$        378

Numerator

378

Restructuring charges (3)

670

Net losses of growth

investments (4)

300

Adjusted numerator

$     1,348

Average Balances

Average Balances

$       

521

$        521

129

129

1,196

1,196

7,440

7,440

55

55

2,529

2,529

13,821

13,821

Denominator

$    25,691

Denominator

25,691

Restructuring chares (3)

(436)

Capital projects in progress

and capital base

of growth

Investments (4)

(5,117)

Adjusted denominator

$   20,138

Return on capital

1.5%

Return on capital,

excluding growth

investments

and

restructuring  charges

6.7%

(1)

The

Bloomberg

Methodology

calculates

ROC

based

on

the

trailing

four

quarters.

Average

balances

are

calculated

as

(December

2008

ending

balance

+

December

2007

ending

balance)

divided

by

2

for

the

year

ended

December

31,

2008,

and

(December

2007

ending

balance

+

December

2006

ending

balance)

divided

by

2

for

the

year

ended

December

31,

2007.

(2)

Calculated

as

total

shareholders’

equity

less

preferred

stock.

(3)

Restructuring

charges

after-tax

and

minority

interests

for

the

years

ended

December

31,

2008

and

2007

were

$670

million

and

$201

million,

respectively.

The

pretax

amounts

are

in

Restructuring

and

other

charges

on

Alcoa’s

Statement

of

Consolidated

Income.

The

$436

million

is

the

average

of

the

restructuring

charges

after-tax

and

minority

interests

for

the

years

ended

December

31,

2008

and

2007.

(4)

For

all

periods

presented,

growth

investments

include

Russia,

Bohai,

and

Kunshan.

Short-term borrowings

Short-term debt

Commercial paper

Long-term debt

Preferred stock

Minority interests

Common equity (2)

Short-term borrowings

Short-term debt

Commercial paper

Long-term debt

Preferred stock

Minority interests

Common equity (3)

[Alcoa

logo]

Reconciliation of Adjusted Income

42

(in millions)

Quarter ended

September 30,

2008*

December 31,

2008

Net income

(loss)

$     268

$ (1,191)

Loss from

discontinued

operations

(38

)

(262)

Income (loss) from

continuing

operations

306

(929)

Restructuring

and

other charges

25

614

Other special items**

–

94

Income (loss) from

continuing

operations

–

as

adjusted

$     331

$    (221)

*

Information

for

the

quarter

ended

September

30,

2008

was

reclassified

to

reflect

the

movement

of

the

Electrical

and

Electronic

Solutions

business

to

discontinued

operations

in

the

fourth

quarter

of

2008.

**

Other

special

items

include

obsolete

inventory,

environmental

reserve,

accounts

receivable

reserve,  

non-cash

tax

on

repatriated

earnings,

and

refund

of

indemnification

payment

(see

Slide

6

for

additional  

information).

[Alcoa

logo]

Reconciliation of ATOI to Consolidated Net Income

$     (74)

$(1,191)

$     268

$     546

$     303

$  2,564

$     632

Consolidated net income

(490)

(237)

(115)

(34)

(104)

851

309

Other

(303)

(262)

(38)

(7)

4

(250)

(6)

Discontinued operations

(693)

(637)

(25)

(1)

(30)

(201)

8

Restructuring and other charges

(328)

(78)

(77)

(91)

(82)

(388)

(100)

Corporate expense

(222)

(1)

(84)

(70)

(67)

(365)

(64)

Minority interests

(265)

(81)

(63)

(57)

(64)

(261)

(53)

Interest expense

35

4

10

12

9

40

10

Interest income

(7)

73

(5)

(44)

(31)

(24)

9

Impact of LIFO

Unallocated amounts (net of tax):

$  2,199

$       28

$     665

$     838

$     668

$  3,162

$     519

Total segment ATOI

2008

4Q08

3Q08

2Q08

1Q08

2007

4Q07

(in millions)

43

In

the

first

quarter

of

2008,

management

approved

a

realignment

of

Alcoa's

reportable

segments

to

better

reflect

the

core

businesses

in

which

Alcoa

operates

and

how

it

is

managed.

This

realignment

consisted

of

eliminating

the

Extruded

and

End

Products

segment

and

realigning

its

component

businesses

as

follows:

the

building

and

construction

systems

business

is

reported

in

the

Engineered

Products

and

Solutions

segment;

the

hard

alloy

extrusions

business

and

the

Russian

extrusions

business

are

reported

in

the

Flat-Rolled

Products

segment;

and

the

remaining

segment

components,

consisting

primarily

of

the

equity

investment/income

of

Alcoa's

interest

in

the

Sapa

AB

joint

venture,

and

the

Latin

American

extrusions

business,

are

reported

in

Corporate.

Additionally,

the

Russian

forgings

business

was

moved

from

the

Engineered

Products

and

Solutions

segment

to

the

Flat-Rolled

Products

segment,

where

all

Russian

operations

are

now

reported.

Prior

period

amounts

were

reclassified

to

reflect

the

new

segment

structure.

Also,

the

Engineered

Solutions

segment

was

renamed

the

Engineered

Products

and

Solutions

segment.

Prior

period

information

was

reclassified

to

reflect

the

movement

of

the

Electrical

and

Electronic

Solutions

business

to

discontinued

operations

in

the

fourth

quarter

of

2008.