 JP
Morgan Basics and Industrials Conference Alcoa – The Momentum Continues Alain Belda, Chairman and CEO 11 June 2007 Filed by Alcoa Inc. Pursuant to Rule 425 Under the Securities Act of 1933 Registration Statement: 333-142669 Subject Company: Alcan Inc. Commission File No.: 001-03677 |
 2 World Aluminum Consumption (MT) Outlook for Aluminum is Strong 2005: 32M 2020E: 60.6M +0.4 +1.1 +0.9 +0.5 +7.1 +0.5 Latin America +4.1 Western Europe +2.4 E. Europe, CIS & Other +4.4 North America +17.2 Asia Source: CRU; McKinsey & Co 1998: 22M 7.2 6.7 1.7 5.6 0.8 14.3 7.2 2.6 6.7 1.2 31.5 11.6 5.0 10.8 1.7 |
 3 Rapid growth of cities presents significant opportunities for physical infrastructure utilizing products that we currently make New opportunities in areas like passenger rail, bus, natural disaster survivability products (e.g. hurricane resistant panels), modular housing, integrated building and construction solutions Global Mega Trends Support Growth 1 2 3 4 Increasing trade. Lightweight a key enabler of rapid migration – payload increases of trucks, transport planes, containers Lead the development of lighter, faster, and stronger multi- product offerings to combat the increasing potential for conflicts and terrorism (e.g. tactical / combat vehicles, fighter aircraft) Products for ultra-deep oil and gas exploration Green Building products and solutions to conserve resource usage (e.g. energy, water, construction materials) Solar energy products for buildings and utilities Trends towards miniaturization, hybridization and information integrated products Light and low maintenance hybrid aircraft structures, lightweight multi-fuel vehicles, durable and easy to clean nano-coated aluminum Integrated thermal management for enhanced fuel efficiency Demographics Globalization Natural Resources & Environment Science and Technology Advances |
 4 Market Dynamics Aerospace Automotive Oil and Gas Aerospace |
 5 Aluminum Consumption Growth Rates Source: Alcoa analysis |
 6 China Production Rising to Meet Demand Growth Source: IAI and China Nonferrous Industry Association |
 7 Source: Alcoa analysis Supply / Demand Projections |
 8 Days of Consumption Source: IAI, Reuters and LME |
 9 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 0 5,000 10,000 15,000 20,000 25,000 30,000 Worldwide Production - 000 MT 2006 Smelter Cash Cost Curve Source: CRU full operating cost 75 th Percentile $2,044 |
 10 Momentum Continues |
 11 Momentum Builders Record 2006 Financial Performance Disciplined Capital Management – Debt restructuring – 2007 peak capital spending year – Shareholder return initiatives |
 12 Momentum Builders Continued Improvement in Downstream Performance – Consistent quarter over quarter improvement – Proprietary technology and unique equipment – Continued new product development – Significant investments in productive assets – Unique and proprietary products for growing end markets |
 13 Momentum Builders Realization of the Growth Projects – Pinjarra refinery expansion – 50% aerospace sheet & plate capacity increase – Iceland smelter – Russia and China rolling assets – Sao Luis refinery expansion – Juruti bauxite mine development |
 14 Momentum Builders Continued Portfolio Management – Sale of Alcoa Home Exteriors – Creation of a soft alloy extrusions joint venture – November 2006 downstream restructuring – Exploration of disposition of packaging assets – Strategic review of selected automotive businesses – Offer for Alcan |
 15 A Winning Strategic Combination Creates the premier fully integrated aluminum company Enhanced cash flow and $1 billion in annual synergies Significant scale to compete in a changing environment Optimized portfolio of upstream assets Enhanced capacity for growth Strong technology, operations and talent Shared values and commitment to sustainability |
 16 Alcoa Alcan Shared Refinery Smelter Mine Juruti Suriname Brunei North Iceland Kitimat Coega Quebec Isal Ningxia Jamalco Sohar I Sohar II Sao Luis Wagerup Vietnam Ghana Gove Guinea Global Growth Opportunities Source: Company filings and press releases Victoria Ops Saudi Arabia Trinidad Madagascar |
 17 $1 billion annual pre-tax synergies Includes overhead, manufacturing process optimization and procurement Phased in over 3 years One-time implementation costs approximately $1 billion $1 Billion of Defined & Achievable Synergies Direct materials Indirect materials $200 Procurement Eliminate redundant overhead costs Complementary technology $400 Overhead Productivity Comments Value ($mm) Type Leverage expertise from both companies to create more efficient combined company $1,000 Total Synergies Supply chain / logistics efficiencies Manufacturing overhead optimization Cross-Deployment of best practices $400 Manufacturing Process Optimization Overhead Manufacturing Procurement 40% 40% 20% |
 18 Dual headquarters in Montreal and New York – Strategic management functions in each city Significant Canadian Board representation Alumina and Primary Metals business based in Montreal – Would be the largest aluminum company in the World – $32.3 billion in total revenue – 38,000 employees operating in 29 countries Headquarters of Global Growth group – decision-making centered in Quebec Quebec becomes center of aluminum innovation – Alcan AP50 carbon smelting technology at the Complexe Jonquiere – Alcoa post carbon “inert anode” technology pilot deployment in Quebec Increased Commitment to Canada Corporate Presence Global Business R&D Center The Global Primary Products business headquartered in Montreal will be one of the largest companies in Canada |
 19 The industry has changed significantly with emerging global players in Russia, China, India and the Middle East who are quickly expanding and adding capacity We have carefully considered the regulatory approvals We have a well-developed, detailed roadmap to resolve regulatory approvals through targeted divestitures in the appropriate industry segments We continue to be engaged in significant and meaningful discussions with the regulatory agencies On June 5 th , we filed the notification and report forms required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 We are confident that the transaction will be approved Regulatory Approvals |
 20 A Winning Strategic Combination Creates the premier fully integrated aluminum company Enhanced cash flow and $1 billion in annual synergies Significant scale to compete in a changing environment Optimized portfolio of upstream assets Enhanced capacity for growth Strong technology, operations and talent Shared values and commitment to sustainability |
 21 |
 22 Forward-Looking Statements Certain statements and assumptions in this communication contain or are based on "forward-looking" information and involve risks and uncertainties. Forward-looking statements may be identified by their use
of words like "anticipates," "believes," "estimates," "expects," "hopes," "targets,"
"should," "will," "will likely result," "forecast," "outlook," "projects" or other words of similar meaning. Such forward-looking information includes, without limitation, the statements as to the impact of the proposed acquisition on revenues, costs and earnings. Such forward- looking statements are subject to numerous assumptions, uncertainties and risks, many of which are outside of Alcoa's control.
Accordingly, actual results and developments are likely to differ, and may
differ materially, from those expressed or implied by the forward-looking statements contained in this communication. These risks and uncertainties include Alcoa's ability to successfully
integrate the operations of Alcan; the outcome of contingencies including
litigation, environmental remediation, divestitures of businesses, and anticipated costs of capital investments; general business and economic conditions; interest rates; the
supply and demand for, deliveries of, and the prices and price volatility of
primary aluminum, fabricated aluminum, and alumina produced by Alcoa and Alcan; the timing of the receipt of regulatory and governmental approvals necessary to complete the
acquisition of Alcan and any undertakings agreed to in connection with the
receipt of such regulatory and governmental approvals; the timing of receipt of regulatory and governmental approvals for Alcoa's and Alcan's development projects and other
operations; the availability of financing to refinance indebtedness incurred
in connection with the acquisition of Alcan on reasonable terms; the availability of financing for Alcoa's and Alcan's development projects on reasonable terms; Alcoa's and Alcan's
respective costs of production and their respective production and
productivity levels, as well as those of their competitors; energy costs; Alcoa's and Alcan's ability to secure adequate transportation for their respective products, to procure mining equipment and operating supplies in sufficient quantities and on a timely basis, and to attract and retain skilled staff; the impact of
changes in foreign currency exchange rates on Alcoa's and Alcan's costs and results, particularly the Canadian dollar, Euro, and Australian dollar, may affect profitability as some important raw materials are purchased in other currencies, while
products generally are sold in U.S. dollars; engineering and construction
timetables and capital costs for Alcoa's and Alcan's development and expansion projects; market competition; tax benefits and tax rates; the outcome of negotiations with key
customers; the resolution of environmental and other proceedings or
disputes; and Alcoa's and Alcan's ongoing relations with their respective employees and with their respective business partners and joint venturers. |
 23 Forward-Looking Statements Additional risks, uncertainties and other factors affecting forward looking statements
include, but are not limited to, the following: •Alcoa is, and the
combined company will be, subject to cyclical fluctuations in London Metal Exchange primary aluminum prices, economic and business conditions generally, and aluminum end-use markets; •Alcoa's operations consume, and the combined company's operations will consume,
substantial amounts of energy, and profitability may decline if energy costs
rise or if energy supplies are interrupted; •The profitability of Alcoa
and/or the combined company could be adversely affected by increases in the cost of raw materials; •Union disputes and other employee relations issues could adversely affect Alcoa's
and/or the combined company's financial results; •Alcoa and/or the combined company may not be able to successfully implement its
growth strategy; •Alcoa's operations are, and the combined company's
operations will be, exposed to business and operational risks, changes in conditions and events beyond its control in the countries in which it operates;
•Alcoa is, and the combined company will be, exposed to fluctuations in
foreign currency exchange rates and interest rates, as well as inflation and other economic factors in the countries in which it operates; •Alcoa faces, and the combined company will face, significant price competition
from other aluminum producers and end-use markets for Alcoa products
that are highly competitive; •Alcoa and/or the combined company could be adversely affected by changes in the business or financial condition of a significant customer or customers; •Alcoa and/or the combined company may not be able to successfully implement its
productivity and cost-reduction initiatives; •Alcoa and/or the
combined company may not be able to successfully develop and implement new technology initiatives; •Alcoa is, and the combined company will be, subject to a broad range of
environmental laws and regulations in the jurisdictions in which it operates
and may be exposed to substantial costs and liabilities associated with such laws; •Alcoa’s smelting operations are expected to be affected by various
regulations concerning greenhouse gas emissions; •Alcoa and the combined
company may be exposed to significant legal proceedings, investigations or changes in law; and •Unexpected events may increase Alcoa's and/or the combined company's cost of doing
business or disrupt Alcoa's and/or the combined company's operations.
See also the risk factors disclosed in Alcoa's Annual Report on Form 10-K for
the fiscal year ended December 31, 2006. Readers are cautioned not to put
undue reliance on forward-looking statements. Alcoa disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future events or
otherwise, except as may be required by applicable law.
|
 24 In connection with the offer by Alcoa to purchase all of the issued and outstanding
common shares of Alcan (the “Offer”), Alcoa has filed with the
Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (the “Registration Statement”), which contains a prospectus relating to the Offer (the
“Prospectus”), and a tender offer statement on Schedule TO (the
“Schedule TO”). This communication is not a substitute for the Prospectus, the Registration Statement and the Schedule TO. ALCAN SHAREHOLDERS AND OTHER INTERESTED PARTIES ARE URGED TO READ THESE
DOCUMENTS, ALL OTHER APPLICABLE DOCUMENTS AND ANY AMENDMENTS OR SUPPLEMENTS
TO ANY SUCH DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE EACH CONTAINS OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT ALCOA, ALCAN AND THE OFFER.
Materials filed with the SEC are available electronically without charge at the SEC’s website, www.sec.gov. Materials filed with the Canadian securities regulatory
authorities ("CSRA") are available electronically without charge at www.sedar.com. Materials filed with the SEC or the CSRA may also be obtained without charge at Alcoa’s website, www.alcoa.com, or by directing a request to Alcoa’s investor relations
department at (212) 836-2674. In addition, Alcan shareholders may
obtain free copies of such materials filed with the SEC or the CSRA by directing a written or oral request to the Information Agent for the Offer, MacKenzie Partners, Inc., toll-free at (800) 322-2885 (English) or (888) 405-1217 (French). While the Offer is being made to all holders of Alcan Common Shares, this communication
does not constitute an offer or a solicitation in any jurisdiction in which
such offer or solicitation is unlawful. The Offer is not being made in, nor will deposits be accepted in, any jurisdiction in which the making or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, Alcoa may, in
its sole discretion, take such action as they may deem necessary to extend the Offer in any such jurisdiction. Where to Find Additional Information |
 25 APPENDIX |
 26 Return on Capital (ROC) is presented based on Bloomberg Methodology which calculates ROC
based on trailing four quarters. Reconciliation of Return on Capital 1Q'07 4Q'06 3Q'06 2Q'06 1Q'06 4Q'05 3Q'05 2Q'05 1Q'05 Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg (In Millions) Method Method Method Method Method Method Method Method Method Net income $2,302 $2,248 $2,113 $1,865 1,581 $1,233 $1,270 $1,271 $1,215 Minority interests $446 $436 $418 $368 304 $259 $230 $239 $252 Interest expense (after-tax) $281 $291 $272 $268 $274 $261 $263 $234 $206 Numerator (sum total) $3,029 $2,975 $2,803 $2,501 $2,159 $1,753 $1,763 $1,744 $1,673 Average Balances Short-term borrowings $441 $386 $349 $306 $342 $279 $155 $152 $185 Short-term debt $360 $451 $449 $55 $53 $58 $272 $273 $269 Commercial paper $972 $1,192 $1,678 $1,501 $1,652 $771 $581 $553 $815 Long-term debt $5,767 $4,861 $4,915 $5,333 $5,243 $5,309 $5,746 $5,920 $6,023 Preferred stock $55 $55 $55 $55 $55 $55 $55 $55 $55 Minority interests $1,669 $1,583 $1,416 $1,340 $1,280 $1,391 $1,332 $1,253 $1,263 Common equity $14,621 $13,947 $14,120 $13,834 $13,611 $13,282 $13,045 $12,761 $12,766 Denominator (sum total) $23,885 $22,475 $22,982 $22,424 $22,236 $21,144 $21,185 $20,967 $21,376 Return on Capital 12.7% 13.2% 12.2% 11.2% 9.7% 8.3% 8.3% 8.3% 7.8% |
 27 Return on capital, excluding growth investments is a non-GAAP financial
measure. Management believes that this measure is meaningful to
investors because it provides greater insight with respect to the underlying operating performance of the company’s productive assets. The company has significant
growth investments underway in its upstream and downstream businesses, as
previously noted, with expected completion dates over the next several years. As these investments generally require a period of time before they are productive,
management believes that a return on capital measure excluding these growth
investments is more representative of current operating performance. Reconciliation of Adjusted Return on Capital 1Q'07 4Q'06 3Q'06 2Q'06 1Q'06 4Q'05 3Q'05 2Q'05 1Q'05 Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg Bloomberg (In Millions) Method Method Method Method Method Method Method Method Method Numerator (sum total) $3,029 $2,975 $2,803 $2,501 $2,159 $1,753 $1,763 $1,744 $1,673 Russia, Bohai, and Kunshan net losses ($79) ($74) ($85) ($78) ($86) ($71) ($48) ($41) ($12) Adjusted numerator $3,108 $3,049 $2,888 $2,579 $2,245 $1,824 $1,811 $1,785 $1,685 Average Balances Denominator (sum total) $23,885 $22,475 $22,982 $22,424 $22,236 $21,144 $21,185 $20,967 $21,376 Capital projects in progress and Russia, Bohai, and Kunshan capital base $3,945 $3,655 $2,540 $2,330 $2,139 $1,913 $1,776 $1,478 $1,403 Adjusted denominator $19,940 $18,820 $20,442 $20,094 $20,097 $19,231 $19,409 $19,489 $19,973 Return on capital, excluding growth investments 15.6% 16.2% 14.1% 12.8% 11.2% 9.5% 9.3% 9.2% 8.4% |