Slide 1: 2011 CEO Forum
2011 CEO Forum January 13th, 2011
Slide 2: 2010 Operating Performance, Business Activities, 2011 Business Plan, Industry Environment
^ 2010 Operating Performance ^ 2010 Business Activities ^ 2011 Business Plan ^ 2011 Industry Environment Figures provided in this presentation are based on unaudited financial statements of the Company. Certain contents in this presentation are subject to change during the course of auditing process
Slide 3: Consolidated Operating Performance
Consolidated Operating Performance Achieved 60.5 tn KRW revenue, 5.7 tn KRW op. income (in billion KRW) * Revenue by sector: includes inter-company transactions 2008 2009 2008 2009 2010 < Revenue > < Operating Income > 2010 Consolidated POSCO 41,743 30,642 POSCO 6,540 7,174 3,148 36,855 3,868 26,954
Slide 4: Consolidated Operating Performance: Assets grew
Assets grew to 68 trillion KRW (in billion KRW) *Assets, Liabilities, Equity by Sector: includes inter-company transactions < Assets > < Liabilities > < Equity > Assets Assets Assets Liabilities Liabilities Liabilities Equity Equity Equity 2008 2009 2010 2008 2009 2010 2008 2009 2010 Steel 41,457 44
Slide 5: POSCO Operating Performance: Production and Sales
B/F 30,362 27,667 30,614 High-Mill 1,329 390 1,269 S T S 1,445 1,473 1,833 Import 22,193 18,390 20,383 Export 8,973 10,047 11,082 *Inventory 1,127 435 745 POSCO Operating Performance Increased due to facility expansion · upgrade ? (P) 4BF revamping (Jul~Sep), (G) New plate mill (Sep), (P) 2CR renova
Slide 6: POSCO Operating Performance: Sales by Product
(in thousand tons) 2008 2009 2010 2008 2009 2010 YoY (%) Hot Rolled 7,759 7,642 7,758 1.5% Plate* 5,157 4,917 4,810 ^2.2% Wire Rod 2,020 1,960 2,020 3.1% Cold Rolled 12,793 10,568 12,779 20.9% Electrical Steel 932 840 980 16.7% S T S 1,306 1,368 1,694 23.8% Others 1,199 1,142 1,425 24.8% Total 31,16
Slide 7: POSCO Operating Performance: Ratios
(%) Return on Equity 24.4 33.3 29.2 37.4 15.9 17.0 10.8 Liability to Equity (%) 12.7 Revenue Growth 30.6 (% yoy) 27.0 32.6 Profitability recovered · sound financials maintained 22.7 34.8 ^11.8 13.5 20.7% Ratios EBITDA 6.0 8.4 5.2 27.6 19.3 27.2 EBITDA Margin (%) (in trillion KRW) 22.6% 7.4 2007 2008
Slide 8: POSCO Operating Performance: Quarterly Income
Op. income dropped as RM price continued rising (in billion KRW) < Revenue > < Operating Income > (in billion KRW) 6,950 7,933 8,524 1,447 1,836 1,111 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 653 13.0 20.8 23.1 1Q 2Q 3Q 4Q F/P Sales Volume (in thousand ton) Carbon Steel 7,064 7,422 7,323 7,962 F/P Sales Volume (in t
Slide 9: Summarized Income Statement
2008 2009 2010 2008 2009 2010 YoY(%) Revenue Revenue 30,642 26,954 32,582 20.9% Gross Income Gross Income 7,935 4,380 6,564 49.9% (Gross Margin) (Gross Margin) (25.9%) (16.2%) (20.1%) - C G & A C G & A 1,395 1,232 1,517 23.1% Operating Income Operating Income 6,540 3,148 5,047 60.3% (Op. Margin) (Op
Slide 10: Summarized Statement of Financial Position
2008 2009 2010 2008 2009 2010 YoY(%) Current Assets Current Assets 13,693 12,918 13,009 0.70% Cash Equivalents 3,722 6,754 3,233 ^52.1% Notes Receivable 3,229 2,684 3,327 24.0% Inventory 6,416 2,996 5,989 99.9% Long-term Assets Long-term Assets 23,340 27,075 35,182 29.9% Investment securities 8,633
Slide 11: 2010 Business Activities
^ 2010 Operating Performance ^ 2010 Business Activities ^ 2011 Business Plan ^ 2011 Industry Environment
Slide 12: POSCO Business Activities: Global capacity expansion
? Expand global capacity · marketing base ? Indonesia integrated mill groundbreaking - 1st stage 3Mt (~'13), total 6Mt planned ? First overseas integrated-mill project initiated ? Enhance premium steel capacity · sales base in strategic region - India CGL groundbreaking (~'12) : automotive steel 450
Slide 13: POSCO Business Activities: Technology and cost competitiveness
Hume Coal API Roy Hill ? Strengthened technology · cost competitiveness ? Enhance technology & developed premium steel (R&D / Revenue : 1.62%) - Develop World Best & World First product : sales volume 4.68Mt, op. margin over 20% - Established commercialized production line for next generation automo
Slide 14: POSCO Business Activities: Future growth engine
Daewoo Int'I SPA Signing ? Secured future growth engine ? Secure group long-term growth through M&A - Daewoo Int'l : expand global network & resource business - Sungjin Geotech : secure offshore plant engineering expertise ? Lay basis for 'comprehensive materials company' - Set up integrated line fo
Slide 15: Subsidiaries' Business Activities
Steel E&C Energy ICT ? POSCO SS : expanded strategic product sales to increase profitability - Strategic product (400 STS, etc.) sales portion : 21.8% ('09) ^ 25.0% ('10) ? POSCO C&C : built production line for HVA Alcosta product (450Kt/yr) - Completed #1CGL Alcosta facility renovation Chemical ^ M
Slide 16: Investment
(in billion KRW) • 2010 Investments (POSCO) : 9.4 trillion KRW • Category Investment Major Activities Domestic Steel 4,227 G) Plate mill, G) #5 sintering / #5 coking plant P) #3 steelmaking construction Overseas Steel 198 Global processing centers addition Raw Material 482 Roy Hill, API iron-ore min
Slide 17: Dividend & Share price
? Continue long-term · stable dividend policy (10,000 won/share planned) • Payout ratio: 18.3%, dividend yield : 2.05% * Based on '10/E share price 2006 2007 2008 2009 2010 Dividend (KRW) 8,000 10,000 10,000 8,000 10,000 (interim) (2,000) (2,500) (2,500) (1,500) (2,500) ? Weak share price due to slu
Slide 18: 2011 Industry Environment
^ 2010 Operating Performance ^ 2011 Industry Environment ^ 2011 Business Plan ^ 2010 Business Activities
Slide 19: Global Steel Market
Global Steel Market Steel Demand Forecast * World Steel Association '09 1.13 1.34 +5.3% '11(F) (billion tons) '10 1.27 +13.1% 1.21 '08 Growth ^1.0% ^6.6% Steel Production Forecast '09 '10 '11(F) Global 1.22 1.38 1.45 +12.7% +5.1% * World Steel Association Demand (billion tons) China 5.68 6.23 6.52 ?
Slide 20: Domestic Steel Market
Domestic Steel Market * Korea Automobile Manufacturers Association, POSRI '09 '11(F) Industry Outlook Supply · Demand Outlook '10 41.2 million GT 27.1 29.3 3.51 4.28 4.36 Shipbuilding New orders Automobile Prod'n '09 '10 '11(F) * POSRI Demand Supply (in million ton) 48.6 58.0 62.0 47.3 54.8 57.4 +6.
Slide 21: Raw Material
Raw Material ? 1Q '11 Contract Price Settled - Appx 8% increase from 4Q 2010 * Index price based but details differ by suppliers ? Spot price to remain strong in 1H - Drop in India export & China production - Demand strong as steel production grows Iron Ore Coal ? 1Q '11 Contract Price Settled - HCC
Slide 22: Stainless Steel Market
Stainless Steel Market To recover as emerging countries grow - Production : 32.8Mt (+5% YoY) - Demand growth: India 15%, China 8% ? Price to increase in 1H 2011 - Strong nickel price and low STS inventory * Inventory (Wuxi) : 250Kt (mid '10) ^ 190 (end '10) S T S Nickel Consistent price rise since 2
Slide 23: 2011 Business Plan
^ 2010 Operating Performance ^ 2011 Business Plan ^ 2010 Business Activities ^ 2011 Industry Environment
Slide 24: POSCO Business Plan
? Crude steel production 36Mt, sales 34Mt ? Full operation of new, expanded facilities - Maximum production from P) No.4 blast furnace & G) plate mill - Completion of P) No.3 steel-making (1 month from approve), G) No.4 POL production (Sep~) ? Maintain market leadership through strategic marketing -
Slide 25: POSCO Business Plan: Group growth
POSCO Business Plan ? Group growth & investment in new business ? Family management structure & develop strategic business force ? Invest in new growth sector including green and material businesses - Promote green & renewable energy such as SNG and wind-power - Magnesium smelting, lithium extractio
Slide 26: E&C Business Plan (Subsidiaries)
Steel ? Increase production and sales of premium product - Zhangjiagang STS : expand capacity to 1Mt, increase CR sales - POSCO SS : successful completion of electric arc furnace business in Vietnam * Investment: U$ 500K, production: section 700Kt, rebar 300Kt - POSCO C&C : commerical production of
Slide 27: Business Plan (Subsidiaries): Energy, ICT, Chemistry & Materials
POSCO Power : grow power-generation & renewable energy business - Incheon 1,200MW LNG power plant (Jun) / IPP in Indonesia, Vietnam - Fuel cell revenue KRW 100bn, new orders 200bn (new orders: 14MW^36MW) Energy ICT ? Enter new areas, coal-chemical & material for sustainable growth - POSCO Chemtech :
Slide 28: Consolidated Business Target
Consolidated Business Target ? Revenue growth of 9%, strategic investment for global growth The data above represents company's internal objectives, Thus should not be used as a basis for investment decision 2010 2011 Revenue (Consolidated) (in trillion KRW) 60.5 66 POSCO Revenue (^) 32.6 36 Crude S