Slide 1: 2Q 2009 Operating Performance
2Q 2009 Operating Performance July 13, 2009
Slide 2: 2Q '09 Operating Performance
2Q ’09 Operating Performance Activity & Accomplishment Steel Industry Environment 2009 Business Plan 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: Executive Summary
Executive Summary Despite weak market, sales increased through developing new market Fierce competition led to sharp drop in price and decline in earnings Executive Summary Crude Steel Production Finished Product Sales Revenue 6,145 ’09.1Q 2Q 7,132 +16.1% (in thousand tons) 5,955 ’09.1Q 2Q 7,012 +17
Slide 4: Production/Sales
4 Production/Sales (in thousand tons) Blast Furnace High-Mill STS 15.3% — 26.7% 6,787 18 327 5,887 - - 258 7,575 417 437 47.8% — 2,738 (39.0) 1,853 (31.1) 2,394 (29.9) Export (%) 2009 1Q QoQ 443 4,274 7,012 6,796 7,132 2009 2Q 2008 2Q ¡÷45.6% 4.2% 17.7% 17.1% 16.1% 814 4,102 5,955 5,802 6,145 856 5,
Slide 5: Sales by Products
5 Sales by Products (in thousand tons) Total 8,019 5,955 7,012 17.7% Others 302 249 308 23.7% Wire Rod 507 432 506 17.1% Cold Rolled 3,334 1,921 2,678 39.4% Elec. Steel 243 175 205 17.1% 2009 1Q QoQ 308 1,108 1,899 2009 2Q 2008 2Q 27.8% ¡÷4.2% 6.6% 241 1,156 1,781 404 1,160 Hot Rolled 2,069 Plate S
Slide 6: Income Summary
6 Income Summary (in billion KRW) * EBITDA 2,363 851 679 ¡÷20.2% 2009 1Q QoQ 431 2.7% 170 5,893 6,344 2009 2Q 2008 2Q 32.6% — ¡÷54.4% 1.3% ¡÷2.0% 325 5.8% 373 5,815 6,471 1,476 25.3% 1,885 5,202 7,458 OP Margin Revenue CoGS Operating Income Net Income ?? Early price cut reflecting weak market & lowe
Slide 7: Key Factors of 2Q Operating Income
7 ¡ùKey Factors of 2Q Operating Income 7,012 39.0 ’09.1Q 2Q 31.5 5,955 Export (%) <Export by Region> (’09.2Q,%) F/P Sales (in thousand tons) China 33.8 S.E.A 19.0 Japan 10.2 Others 32.1 US 2.8 EU 2.1 FY09 raw mat’l usage (%) F/X rate (quarterly average) ¡ù FY09 contract price [Iron Ore] . Lump : ¡÷4
Slide 8: Summarized Income Statement (POSCO)
8 (in billion KRW) ¡÷54.4% — 170 (2.7%) 373 (5.8%) 1,885 (25.3%) Operating income (OR Margin) S G & A 371 283 280 ¡÷1.1% 2009 1Q QoQ 431 (6.8%) ¡÷35 3 124 197 ¡÷14 275 451 (7.1%) 6,344 2009 2Q 2008 2Q 32.6% — - ¡÷93.5% 2.5% — - 663.9% ¡÷31.3% — ¡÷2.0% 325 (5.0%) ¡÷17 46 121 ¡÷120 6 36 656 (10.1%) 6,
Slide 9: Financial Structure
9 Financial Structure Non-current 22,113 23,968 25,060 4.6% Assets Current Assets 2009 1Q QoQ 28,309 7,132 9,329 12,578 37,638 2009 2Q 2008 2Q 2.7% 2.5% ¡÷3.6% ¡÷5.2% 1.1% 27,555 6,960 9,680 13,267 37,235 26,279 2,956 6,817 10,983 33,096 Debt Assets Liabilities Equity ?? Assets up slightly due to do
Slide 10: Summarized Statement of Financial Position (POSCO)
10 (in billion KRW) Interest bearing debt 2,956 6,960 7,132 2.5% Total liability & Equity 33,096 37,235 37,638 1.1% Investment securities Fixed assets 6.5% 3.5% 9,325 15,507 8,755 14,978 8,463 13,358 Cash equivalent assets Notes receivable Inventory 26.9% ¡÷13.0% ¡÷32.5% 5,988 2,505 3,590 4,717 2,87
Slide 11: Consolidated Financial Summary
11 Equity 27,054 28,227 28,992 2.7% Liabilities 14,116 19,707 18,640 ¡÷5.4% Net income 1,468 399 427 7.0% ¡÷40.3% — 350 (3.9%) 586 (6.7%) 2,142 (20.2%) Op income (Margin) 2009 1Q QoQ Assets Revenue 47,632 8,922 2009 2Q 2008 2Q ¡÷0.6% 1.5% 47,934 8,788 41,170 10,579 B/S I/S 74 37 111 ’09.1Q 73 37 110
Slide 12: Consolidated Financial Summary: Income by Sectors
12 IT & Others 8 14 ¡÷2 — Energy 13 24 18 ¡÷25.0% E & C 110 52 95 82.7% IT & Others 153 144 142 ¡÷1.4% Energy 148 111 77 ¡÷30.6% E & C 1,480 1,615 1,966 21.7% QoQ 586 438 348 8,788 11,276 9,406 2009 1Q Consolidated ¡÷40.3% ¡÷24.2% ¡÷36.5% 1.5% 4.5% 2.0% 10,579 8,922 Steel 2,117 221 Steel 11,460 9,59
Slide 13: Consolidated Financial Summary: Financial Position by Sector
13 2009.1Q 2009.2Q 2009.1Q 2009.2Q 2009.1Q 2009.2Q 28,992 36,133 32,923 2,091 588 531 28,227 35,371 32,115 2,073 566 617 Equity Steel E & C Energy IT & Others 47,632 56,622 47,791 6,234 1,302 1,295 Consolidated 18,640 20,489 14,868 4,143 714 764 47,934 19,707 15,386 5,170 584 775 47,501 7,243 1,150
Slide 14: Activity & Accomplishment
14 2Q ’09 Operating Performance Activity & Accomplishment Steel Industry Environment 2009 Business Plan
Slide 15: Strengthen Responsiveness to Crisis
15 Strengthen Responsiveness to Crisis ?? Improve business speed by enacting integrated emergency management 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 31 45 22 85 443 Iron Ore Coal 43 75 814 Utilization Ratio (%) Raw mat’l inventory (day) F/P inventory (in thousand tons) ?? Minimized losses through tight control of r
Slide 16: Expand Domestic/Overseas Market Base
16 Expand Domestic ·Overseas Market Base ?? Maintain domestic competitiveness with improved service & technology ?? Closed price-gap with domestic peers and imports by cutting domestic price ?? Reduce import dependency with development & sales of substitute products* *Mostly premium products ex) str
Slide 17: Continue Growth Investment
17 ?? Complete capacity expansion & renovation of electrical steel (Jun.’09) — GO capacity : 170 ¡ú 250Kt/yr, Premium NO ratio : 25 ¡ú 37% ?? Complete renovation of High-Mill & development of CEM Process (Apr.’09) — Expand premium steel production & enhance productivity · product quality ?? Capacity
Slide 18: Strengthen Cost & Technology Competitiveness
18 ?? R&D to secure technology leadership ?? Expand strategic product through World Best & World First* product development — WB&WF sales & op. margin : 599Kt, 21.4% (’09.1Q) ¡ú 709Kt, 17.2% (2Q) * Hyper NO, pre-primered steel sheet for high end home appliances, API 2W-60 for offshore structure, etc
Slide 19: Subsidiaries' Business Activities
19 Subsidiaries’ Business Activities ?? Receive Sin-gal national housing reconstruction business (Apr.’09) — Amount : KRW 115 bn, (612 units: 6th floor, 8 buildings) ?? Construct ‘IFEX Arts Center’ in Song-Do (May ’09) — Amount : KRW 101.3 bn (Main theater, opera house, etc. (14.5 acre)) ?? Accelera
Slide 20: Steel Industry Environment
20 2Q ’09 Operating Performance Activity & Accomplishment Steel Industry Environment 2009 Business Plan
Slide 21: Global Steel Market
21 66 64 60 57 54 55 57 55 61 59 63 51 49 48 42 34 27 29 30 32 30 33 117 113 108 99 88 82 86 85 92 89 96 0 50 100 150 Jul.’08 Sept. Nov. Jan.’09 Mar. May Global Crude Steel Production HR Price by Region ?? 2Q crude steel production showing slight upturn after sharp decline ?? Upward trend in steel c
Slide 22: China Steel Market
22 China Steel Market Composite Leading Indicator Steel Demand (Nominal) ?? Rising expectation for 8% GDP growth with massive stimulus packages ?? RMB 4tn stimulus plan, 10 key industries , auto & home appliance incentive plan, etc. ?? Urban fixed asset investment in May: +38.6% yoy (real: +45.8%, l
Slide 23: Domestic Steel Market
23 Domestic Steel Market ?? Demand industry utilization & steel price to increase, yet below ’08 level Inventory by Products Domestic HR Spot Price Shipbuilding vol. increase yoy despite sharp drop in new order — Shipbuilding forecast (in thous. GT) 25,600(’08) ¡ú 28,500(’09) Stagnating production t
Slide 24: Raw Material: Iron Ore and Coal
24 Raw Material Iron Ore Coal ?? Tight market continues as Chinese imports keep rise ?? FY’09 contract price settled — Rio Tinto : Fine U$58(¡÷33%), Lump U$69(¡÷44%) — Vale : Fine U$56(¡÷28%), Pellet U$73(¡÷48%) — BHPB : negotiating in line with Rio Tinto level ?? Expect tight S/D as miners cut prod
Slide 25: Stainless Steel, Nickel and Chrome Trend
25 Stainless Steel Nickel // Chrome Trend ?? Nickel — Spot price hike since May in expectation of global economy recovery & increasing STS production — Expect strong price of U$15K/ton or more in 2H09 ?? Chrome — Continued uptrend in FeCr mkt. & supply shortage — Expect price to hike due to increasi
Slide 26: 2009 Business Plan
26 2Q ’09 Operating Performance Activity & Accomplishment Steel Industry Environment 2009 Business Plan
Slide 27: 2009 Business Plan
27 2009 Business Plan * Investment : CAPEX (KRW 4.7tn), Overseas/Raw Material (0.8), Energy/New Business (0.1), Growth (1.7) 2.0 0.9 0.5 17.7 12.8 13.0 14.0 13.3 1H — Consolidated 7.2 3.0 2.1 - Consolidated 41.7 36.1 18.4 — Consolidated 34.7 31.3 17.3 5.3 2.1 13.0 15.1 16.5 2H • Operating Income 6.5