Slide 1: 2Q 2010 Operating Performance
2Q 2010 Operating Performance July 13, 2010
Slide 2: Agenda and basis of presentation
^ 2Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 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 proc
Slide 3: Production and Sales
'09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Crude Steel Crude Steel 7,132 8,228 8,363 17.3% 1.6% Blast Furnace 6,787 7,457 7,601 12.0% 1.9% High-Mill 18 318 318 1,666.7% - S T S 327 453 444 35.8% ^2.0% Finished Product Finished Product 6,796 7,694 7,902 16.3% 2.7% F/P Sales Volume F/P Sales Vo
Slide 4: Sales by Product
1?? 2?? 3?? ?? 60 98 116 1?? 2?? 3?? ?? 82 84 89 1?? 2?? 3?? ?? 98 89 100 1?? 2?? 3?? ?? 73 91 96 (in thousand tons) (%) Utilization Ratio by Industry* (domestic) '09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Hot Rolled 1,782 1,730 1,987 11.5% 14.9% Plate* 1,225 1,120 1,092 ^10.9% ^2.5% Wire Rod
Slide 5: Income Summary
(in billion KRW) '09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Revenue Revenue 6,344 6,950 7,933 25.0% 14.1% CoGs CoGs 5,893 5,155 5,734 ^2.7% 11.2% Operating Income Operating Income 170 1,447 1,836 980.0% 26.9% OP Margin 2.7% 20.8% 23.1% - - Net Income Net Income 431 1,437 1,196 177.5% ^16.8% ^
Slide 6: Summarized Statement of Income (Parent Only)
'09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Revenue Revenue 6,344 6,950 7,933 25.0% 14.1% Gross income (Gross Margin) Gross income (Gross Margin) 451 (7.1%) 1,794 (25.8%) 2,199 (27.7%) 387.6% - 22.6% - G G & A G G & A 280 347 363 29.6% 4.6% Operating income (OP Margin) Operating income (OP Mar
Slide 7: Financial Structure
'09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Assets Assets 37,638 41,167 44,475 18.2% 8.0% Current 12,578 13,584 15,677 24.6% 15.4% Non-current 25,060 27,583 28,798 14.9% 4.4% Liabilities Liabilities 9,329 9,239 11,459 22.8% 24.0% Debt 7,132 6,162 7,542 5.7% 22.4% Equity Equity 28,309 31,928 33
Slide 8: Summarized Balance Sheet (Parent Only)
'09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q YoY QoQ Current assets Current assets Current assets 12,578 13,584 15,677 24.6% 15.4% Cash equivalent assets Cash equivalent assets 5,988 6,633 7,001 16.9% 5.5% Notes receivable Notes receivable 2,505 2,793 3,073 22.7% 10.0% Inventory Inventory 3,590 3,398 5
Slide 9: Consolidated Financial Summary
'09.2Q '09.2Q '10.1Q '10.2Q Total Total 110 122 126 Domestic Domestic 37 41 45 Overseas Overseas 73 81 81 '09.2Q '10.1Q '10.2Q POSCO Zhangjiagang POSCO SS 7,132 200 182 8,228 208 203 8,363 211 212 ? Strong steel & steel support division lead to revenue increase '09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10
Slide 10: Consolidated Financial Summary by Sector
Revenue Revenue Revenue Operating Income Operating Income Operating Income '09.2Q '10.1Q '10.2Q '09.2Q '10.1Q '10.2Q Steel E & C I C T Energy Steel Support 7,460 2,069 227 77 1,938 8,709 1,918 161 209 2,354 9,893 2,262 211 199 2,909 194 84 10 18 45 1,511 71 3 18 77 1,916 95 6 17 132 Consolidated Con
Slide 11: Activities & Accomplishments
^ 2Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 12: Activities & Accomplishments: Capacity Expansion
? Facility addition · upgrade for 41Mt domestic capacity ? Capacity Expansion - P) New steelmaking plant (~Sept.'10, progress 92%) : 4.65Mt/yr, +1.95Mt - G) New steelmaking & plate plant (~Jul.'10, progress 99%) : +2Mt/yr - P) #2 CCL #2 caster rationalization (Jun. ~ Oct. '10) : +600Kt/yr ? High-val
Slide 13: Activities & Accomplishments: Global Growth Investment
? Invest for global growth ? Overseas integrated steel mills - India Orissa (1st 4Mt) : socio-economic-survey (Jun.), initiate ground work (2H) - India SAIL JV (1st 3Mt) : approval in principle by SAIL BOD (May), Joint F/S (Jul. ~ Aug.) - Indonesia Krakatau JV (1st 3Mt) : finalizing JVA terms, initi
Slide 14: Activities & Accomplishments: Raw Material Investment
? Raw material & comprehensive material investment ? Invest in raw material mine development - Australia Roy Hill iron-ore mine : increase stake up to 15% (~Dec.'10), secure 10Mt/yr ('14~) - Mozambique Revuboe coal mine : acquired 7.8% stake (May) - Australia Sutton Forest coal mine : acquired 70% s
Slide 15: Activities & Accomplishments: Pricing and Cost Savings
? Operate quarterly product pricing system ? Flexible policy as raw material price negotiation process changed ? Continue cost savings activity ? Cost saving in '10.1H : 680.4bn KRW (progress 59%, '10 target 1,150bn) - Major activities : expand use of cheaper raw material and by-products, etc. - Cat
Slide 16: Subsidiaries' Key Activities
? POSCO SS, new steelmaking plant construction (Jun.'10 ~ Feb.'12) - 60t electric furnace & wide bloom casting facility : capacity increase +240Kt/yr ? POSCO C&C, No.1 CGL facility upgrade (~Aug.'10) - Expand advanced product (AL-STS 409L,etc) : ALCOSTA capacity +200Kt/yr • Received orders expanded
Slide 17: Steel Industry Environment
^ 2Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 18: Global Steel Market Trend & Outlook
? 12% increase in demand forecasted due to economic recovery * worldsteel(Apr.'10), POSRI(Jul.'10) 2008 2009 2010 2008 2009 2010 YoY USA 98 57 73 27% EU 183 117 137 17% China 435 542 587 8% India 51 55 63 14% Russia 35 25 27 11% World 1,204 1,120 1,255 12% (in million tons) * MBR, Mysteel (Jul.'10)
Slide 19: China Steel Market Trend & Outlook
? Expect solid steel demand growth in 2H led by economy growth ? Demand forecasts by industry (YoY) : auto +18%, construction +8%, home app. +6% ? WSD expects nominal demand to grow by 8%, real demand to grow by 9% (Jun.) ? Net export grew & inventory control delayed w/ production growth ? Net expor
Slide 20: Korea Steel Market Outlook
? Consumption to grow by 16% as consuming industries recover ? Prod'n growth by 7.5% w/ recovery of exports, despite soft domestic mkt. - Auto Production (in thousand unit) : 3,513 ('09) ^ 3,777 ('10, Org.) ^ 3,837 (Revised) ? Improved outlook in number of orders - Shipbuilding (in million GT) : 29.
Slide 21: Raw Material: Coal and Iron Ore
??? ?'10.3Q price agreed with Major 3 - Approx. 26% increase over 2Q price ^ Prices get adjusted based on quarterly index & Different conditions apply per supplier ? Drop in spot price since late April - Decrease in iron-ore imports due to tax rebate & Chinese steel market condition ? '10.3Q contrac
Slide 22: ?? 8/20/2008 8/21/2008 8/22/2008 8/26/2008 8/27/2008 8/28/2008 8/29/2008 9/1/2008 9/2/2008 9/3/2008 9/4/2008 9/5/2008…
?? 8/20/2008 8/21/2008 8/22/2008 8/26/2008 8/27/2008 8/28/2008 8/29/2008 9/1/2008 9/2/2008 9/3/2008 9/4/2008 9/5/2008 9/8/2008 9/9/2008 9/10/2008 9/11/2008 9/12/2008 9/15/2008 9/16/2008 9/17/2008 9/18/2008 9/19/2008 9/22/2008 9/23/2008 9/24/2008 9/25/2008 9/26/2008 9/29/2008 9/30/2008 10/1/2008 10/2
Slide 23: 2010 Business Plan
^ 2Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 24: 2010 Business Plan
2009 2010 2009 2010 YoY • Crude Steel Production 29.5 34.4 17% - Consolidated Production 31.1 36.1 16% • Sales Volume 28.4 32.3 14% • Revenue 27.0 33.5 24% - Consolidated Revenue 37.0 46.5 26% • Operating Profit 3.1 5.6 81% - Consolidated Op. Profit 3.9 6.2 59% • Total Investments 4.9 10.4 112% - Do
Slide 25: 2Q 2010 Operating Performance
2Q 2010 Operating Performance July 13, 2010