Posco Holdings Inc. · KRX:005490
Posco — Q3 2006 Earnings Presentation
32 slides from Posco's earnings presentation, Oct 13, 2006
Slide 1: 3Q 2006 Operating Performance
3Q 2006 Operating Performance Oct 13, 2006
Slide 2: Unaudited non-consolidated financial statements notice
Figures provided in this presentation are based on unaudited non-consolidated financial statements of the Company for the second quarter of 2006. Certain contents in this presentation are subject to change during the course of auditing process.
Slide 3: Agenda
I. 3Q '06 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2006 Business Plan ^ Agenda
Slide 4: Production/Sales
Production/Sales Production increased due to completion of major rationalizations including Pohang #3BF, #2HR in 1H '06 Sales increased due to favorable condition in consuming industries including shipbuilding and automobile (in thousand tons) * 1H '06 Major Facility Rationalizations - Pohang #3 BF
Slide 5: Sales by Product
Sales by Product (in thousand tons) 2005 3Q 2006 2006 Quarter-on-Quarter Quarter-on-Quarter 2005 3Q 2Q 3Q Quarter-on-Quarter Quarter-on-Quarter Hot Rolled 2,419 2,120 2,192 72 3.4% Plate 863 937 883 ^54 ^5.8% Wire Rod 456 420 458 38 9.0% Cold Rolled 2,578 2,528 2,817 289 11.4% Electrical Steel 162 1
Slide 6: Income Summary
Income Summary 2005 3Q 2006 2006 Quarter-on-Quarter Quarter-on-Quarter 2005 3Q 2Q 3Q Quarter-on-Quarter Quarter-on-Quarter Sales Sales 5,458 4,672 5,298 626 13.4% CoGS CoGS 3,835 3,473 3,954 481 13.8% Operating Income Operating Income 1,319 941 1,064 123 13.1% OP Margin 24.2% 20.1% 20.1% - - Net Inc
Slide 7: Financial Structure
Financial Structure 2005 3Q 2006 2006 Quarter-on-Quarter Quarter-on-Quarter 2005 3Q 2Q 3Q Quarter-on-Quarter Quarter-on-Quarter Assets Assets 22,934 24,115 25,194 1,079 4.5% Current Asset 7,469 6,672 7,548 876 13.1% Fixed Asset 15,465 17,443 17,646 203 1.2% Liabilities Liabilities 4,188 4,216 4,549
Slide 8: Financial Ratios
Financial Ratios '03 '04 '05 '06.1/4 2/4 3/4 42.1 32.6 70.4 75.4 24.0 80.6 19.6 83.6 '05.3/4 4/4 '06.1/4 2/4 3/4 (Quarterly closing price) 245,000 234,000 202,000 250,500 254,500 21.2 82.5 16.9 '03 '04 '05 '06.1/4 2/4 3/4 '03 '04 '05 '06.1/4 2/4 3/4 22.0 81.9 Operating Margin (%) Liability-to-Equity
Slide 9: Agenda
I. 3Q '06 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2006 Business Plan ^ Agenda
Slide 10: Progress on India Project
Progress on India Project Indian government accorded in principle approval to POSCO-India's specific SEZ ? Tariff, corporate tax exemption & administrative procedure simplified ? Final nod expected to follow the conclusion of contract for production base purchase ? Final nod expected to follow the c
Slide 11: Progress on FINEX
Progress on FINEX(r) Description Description Initial Target Result Result Description Description Initial Target Aug '05 Aug '06 Production Per annum (thou. tons) 600 720 870 Production Per day (ton) 1,800 2,150 2,550 Rate of operation % 95 92 98 Coal rate kg/tHM 850 820 750 Continuous operating day
Slide 12: Strategic Products & Cost Saving Efforts
'05 '06.3Q '06(F) '07(F) '08(F) Strategic Products & Cost Saving Efforts 80% 62% 58.6% 48% 56% Strategic Product Sales Portion '06 Target Jan~Sep Rate of Progress 889bn KRW 803.9bn KRW 90.4% '06 Cost Savings '02 '06(F) Change Re-rolling 5.5 5.3 ^0.2 Automobile 1.9 5.0 3.1 Pipe 3.8 3.5 ^0.3 Distribut
Slide 13: Global Supply Network for Automotive Steel
Global Supply Network for Automotive Steel 1 Establish production base in major automotive markets ? Expand regional supply through construction of CGL & establishment of Processing Centers N. America Japan E. Europe S.E. Asia China Production plant Warehouse Processing center East Europe : Growing
Slide 14: Construction of Automotive Steel CGL in Mexico
Construction of Automotive steel specializing CGL in Mexico Major P/C site Major Automobile production base Major Harbor Brownsville Veracruz Mobile New Orleans S.L.Potosi Monterrey Puebla Manzanillo Decatur Altamira Business Overview Investment Background Location : Altamira industrial complex (Eas
Slide 15: Automotive Steel Specialization
? Investment Benefit - 6.7mn sheets of annual production capacity (completion of phase 3) · Phase 1 : 1.7mn, Phase 2 : 3.6mn sheets ? Expected Benefit - Mass production and sales of products manufactured with new technology - Automotive steel/parts Total Solution ? Specialty - Lighter auto-body : 30
Slide 16: Global Marketing Competitiveness
Global Marketing Competitiveness ? Prague Office Overview - Location : Prague, Czech Republic - Regions covered : Czech, Slovakia, Poland, Hungary ? Expected Benefit - Expansion of sales to automotive and home- appliance industries in Eastern Europe with high growth potential - To be developed as a
Slide 17: Strategic Alliance in STS Division
Strategic Alliance in STS Division Joint venture with Taihan Electric Wire on STS CR division ? Equity investment in Taihan Electric Wire's spin-off of STS CR business ? POSCO to supply materials to new entity's CR processing business Business : STS CR processing, manufacturing & sales of CR product
Slide 18: Uplifting Shareholder's Value
Uplifting Shareholder's Value (in KRW) ? Policy : Long term, stable dividend - Interim dividend introduced from '00 Interim dividend amount - Interim Dividend : 2,000 KRW/share - Total Interim Dividend : 155.5 bn KRW < Dividend Payout History > < Share Buyback History > ? 4% Share buyback in '06 - D
Slide 19: Corporate Citizenship
Corporate Citizenship - Selected as "Sustainability Leader" in Steel Sector for 2 Consecutive years (SAM Dow Jones, US) Excellence in ? management & corporate governance ? Commercialization of eco-friendly technology, FINEX ? Strengthened Ethical Management ? Practice of Coexistence Management - The
Slide 20: Agenda
I. 3Q '06 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2006 Business Plan ^ Agenda
Slide 21: Global Steel Market
Global Steel Market 1 Consumption forecasts: continued increase in BRICs, stable in other areas ? Stable growth in global consumption - Stabilization in developed countries, increase in BRICs to continue - 10% demand increase in China Variable : Slowdown in US & over-capacity in China - Structural a
Slide 22: Regional steel price trends
(in U$/T) Small increase having entered high-demand season & consumers securing materials for national holiday. Low inventory level maintained Guangzhou : 421(Apr.'06) ^ 485(May) ^ 484(Jun) ^ 434(Jul) ^ 451(Aug) ^ 454(Sep) Weak/stable trend maintained due to slowdown in consuming industry & inflow o
Slide 23: Global Steel Market price gap and exports
'05.1? Feb'05 3? Apr 5? Jun 7? Aug 9? Oct 11? Dec '06.1? Feb'06 Mar Apr May Jun Jul Aug Sep ?? 705 694 683 639 573 529 485 529 617 617 617 617 606 606 628 639 694 716 716 694 694 ?? 633 638.5 644 693 663 644 622 607 569 537 530 504 537 537 543 592 602 594 620 630 ?? 649 639 636 624 608 598 537 515 5
Slide 24: China Steel Industry Trend
1q 2q 3 4 1 2 3 4 5 6 7 8 9 10 11 ?? 517 566 566 480 371 371 371 411.5 493 493 493 493 493 493 493 ?? 554 582 473 398 398 356 399 452.2 520 508 558 558 520 445 489 ?? 528 540 397 344 316 316 351 393.5 436 436 479 479 423 396 411 ?? 540 463 400 328 335 375 383 421 485 484 434 451 454 1q 2q 3 4 1 2 3
Slide 25: China Steel Industry Forecast
China Steel Industry Forecast Maintenance concentrated in 2H - Expected production cut by major mills (thousand tons) · (Anshan) HR 20, (Taiyuan) HR 6 (Benxi) HR 5, (Baoshan) Dec HR Repair Addition of new facilities continue - Crude Steel Production (mn tons) 2H.'05 1H.'06 2H.'06 (QoQ/YoY) 181 199 2
Slide 26: Restructuring China Steel Industry
Restructuring China Steel Industry 1 Issues in Chinese Steel Industry ? Structured around low value-added, construction products - Flat prodn. rate: 39% ('05) ? Increased no. of small mills, causing inefficiency - Portion of Top10 mills: 46('01) ? 35%('05) Increased iron ore imports & rapid growth i
Slide 27: Restructuring China Steel Industry 2
Anshan Benxi Tangshan Chengde Shoudu Xuanhua Laiwu Steel (Arcelor) Hebei Xingtai Shijiazhuang Hunan Valin (Mittal) Baoshan Ma'anshan Echeng Wuhan Lizhou Shuicheng Increased M&A, through government support and voluntary actions Acquisitions within region, centered around large mills Wuhan(1,040) > Ec
Slide 28: Domestic Steel Industry
Domestic Steel Industry 1H. '06 2H. '06 1H. '07 1H. '06 3Q 4Q 2H. '06 1Q 2Q 1H. '07 Consump-tion 24,115 11,786 12,546 24,332 11,340 13,474 24,814 Export 8,837 4,261 4,677 8,938 4,561 4,649 9,211 Production 27,726 14,086 15,226 29,312 13,609 15,570 29,179 Import 5,226 1,961 1,996 3,957 2,292 2,554 4,
Slide 29: Steel demand and raw material price trends
Steel demand Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Column 16 Jan 21.75 8.4 Jan 21.25 8.2 1? 20 7 1? 21 7.75 Feb 21 8.1 Feb 23 8.6 Feb 25 12 2? 23.75 11.25 Mar 24.5 10.7 Mar 22.25 9.3 3? 23.5 9.5 3? 22.5 9 Apr 23 9.1 4? 22.6
Slide 30: Agenda
I. 3Q '06 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2006 Business Plan ^ Agenda
Slide 31: 2006 Business Plan
2006 Business Plan The data above represents the Company's internal objectives, and should not be used as a basis for investment decisions ? Crude Steel Production 30.5 30.1 ? Sales Volume 28.7 28.6 ? Revenue 21.7 19.8 ? CAPEX 3.7 3.9 2005 2006 (F) (in mn tons, tr KRW) - Consolidated Production 31.4
Slide 32: 3Q 2006 Operating Performance
3Q 2006 Operating Performance Oct 13, 2006