Slide 1: 1Q 2010 Operating Performance
1Q 2010 Operating Performance April 13, 2010
Slide 2: Agenda
^ 1Q 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
3 Production · Sales (in thousand ton) '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Crude Steel Crude Steel 6,145 8,373 8,228 33.9% ^1.7% Blast Furnace 5,887 7,688 7,458 26.7% ^3.0% High-Mill - 239 318 - 33.1% S T S 258 446 452 75.2% 1.3% Finished Product Finished Product 5,802 8,027 7,694 32.6
Slide 4: Sales by Product
4 Sales by Product (in thousand ton) '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Hot Rolled 1,651 2,131 1,730 4.8% ^18.8% Plate* 1,286 1,221 1,120 ^12.9% ^8.3% Wire Rod 432 508 503 16.4% ^1.0% Cold Rolled 1,920 3,126 3,148 64.0% 0.7% Electrical Steel 175 240 239 36.6% ^0.4% S T S 241 407 411 7
Slide 5: Income Summary
5 Income Summary (in billion KRW) '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Revenue Revenue 6,471 7,288 6,950 7.4% ^4.6% CoGs CoGs 5,816 5,366 5,155 ^11.4% ^3.9% Operating Income Operating Income 373 1,587 1,447 287.9% ^8.8% OP Margin 5.8% 21.8% 20.8% - - Net Income Net Income 325 1,275 1,43
Slide 6: Summarized Statement of Income (Parent Only)
6 '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Revenue Revenue 6,471 7,288 6,950 7.4% ^4.6% Gross income (Gross Margin) Gross income (Gross Margin) 656 (10.1%) 1,922 (26.4%) 1,794 (25.8%) 173.5% - - ^6.7% - - G G & A G G & A 283 335 347 22.6% 3.6% Operating income (OP Margin) Operating income (
Slide 7: Financial Structure
7 Financial Structure (in billion KRW) '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Assets Assets 37,235 39,993 41,167 10.6% 2.9% Current 13,267 12,918 13,584 2.4% 5.2% Non-current 23,968 27,075 27,583 15.1% 1.9% Liabilities Liabilities 9,680 9,042 9,239 ^4.6% 2.2% Debt 6,960 6,113 6,162 ^11.5%
Slide 8: Balance sheet detail
8 '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q YoY QoQ Current assets Current assets Current assets 13,267 12,918 13,584 2.4% 5.2% Cash equivalent assets Cash equivalent assets 4,717 6,754 6,633 40.6% ^1.8% Notes receivable Notes receivable 2,879 2,684 2,793 ^3.0% 4.1% Inventory Inventory 5,319 2,996 3
Slide 9: Consolidated Financial Summary
9 Consolidated Financial Summary (in billion KRW) '09.1Q '09.4Q '10.1Q Total 111 115 122 Domestic 37 41 41 Overseas 74 74 81 '09.1Q '09.4Q '10.1Q POSCO Zhangjiagang POSCO SS 6,145 128 172 8,373 206 206 8,228 208 203 (in thousand ton) ? Revenue increased due to solid market condition in steel sector
Slide 10: Consolidated Financial Summary by Sector
10 Consolidated Financial Summary (in billion KRW) Revenue Revenue Revenue OP Income OP Income OP Income '09.1Q '09.4Q '10.1Q '09.1Q '09.4Q '10.1Q Steel E & C Energy IT & Others 9,406 1,615 111 145 11,243 2,541 209 166 11,084 1,840 209 217 348 52 24 14 1,689 128 21 8 1,581 68 18 13 Consolidated Cons
Slide 11: Agenda
^ 1Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 12: Expand capacity and strengthen market base
12 ? Expand capacity & strengthen market base ? Domestic capacity expansion - P) New steelmaking plant (~Sept.'10, progress 77%) : capacity increase (4.65Mt/yr, +195Mt) - G) New plate plant (incl. steelmaking) (~Jul.'10, progress 91%) : capacity increase (+2Mt/yr) - G) #4 BF achieved 5Mt/yr capacity
Slide 13: Invest for global growth
13 ? Invest for global growth ? Accelerate overseas upstream projects - India Orissa integrated mill : 1st stage 4Mt (total 12Mt planned) · Awaits supreme court's final ruling for PL, groundbreaking to start during 2H'10 - Indonesia integrated mill J/V : 1st stage 3Mt (total 6Mt) · Investment incent
Slide 14: Promote new growth and green business
14 ? Promote new growth & green business ? Lay basis for comprehensive material business - Joint study with MLTM & KIGAM* on commercialization of marine Li. extracting tech. (Feb) - Signed MOU with RIST & Gangneung City for developing new Mg. smelting tech. (Mar) - POS-HiMetal start construction of
Slide 15: Strengthen cost and technology competitiveness
15 ? Strengthen cost & technology competitiveness ? 1Q cost saving : 322.3bn KRW (progress 28%) - Major activities : expand use of cheaper RM and by-products, etc. ? R&D investment for technology leadership - Expand development · sales of World Best & World First product : 995Kt, OPM 26% (1Q) · Heat
Slide 16: Competitiveness ranking and AGM
16 ? No. 1 on most competitive company ranking (WSD, as of '10 Jan.) - Reclaim 1st rank in 6 years after '04 (perfect score in 6 categories among 23 criteria) ? 42nd Annual General Meeting of Shareholders ? Enhance group management & corporate governance - Restructure group organization into growth
Slide 17: Preliminary Bid for Daewoo International
17 Activities & Accomplishments ? Preliminary Bid for Daewoo International ? Introduction - Bidding stake : 68.2% stake (KAMCO, etc.), range : 50%+1share ~ 68.2% ? Overview of Daewoo International (Business Division) - Trading : No.1 revenue among peers in Korea (KRW1.1bn in '09, 60% from steel/meta
Slide 18: Group business activities: Steel, E&C, Energy, ICT
18 (POSCO Power) (POSCO ICT) Steel E&C Energy ICT (POSCO E&C) ? POSCO SS, Invest in Vietnam electric furnace project - To produce 1Mt/yr of long product (target to receive local investment admission by Apr '10) ? POSCO C&C, found R&D center to develop core surface treatment tech - Key study area : s
Slide 19: Agenda
^ 1Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 20: Global Steel Market Trend & Outlook
20 Global Steel Market Trend & Outlook ? Prod'n · utilization ratio increased, steel price surged since March ? Demand to stay firm globally, expecting over 10% increase Demand Trend in Major Countries * WSD (Mar.'10), Eurofer(Feb.'10), POSRI(Mar.'10) 2008 2009 2010 2008 2009 2010 YoY U.S 110 66 88
Slide 21: China Steel Market Trend & Outlook
21 China Steel Market Trend & Outlook ? Strong steel price to remain with economy growth & solid demand ? Anticipate quick economy growth : auto +13%, construction +6%, machinery +7% (YoY) ? Expect 5~8% increase in steel consumption ? Steel price continued rising due to RM price hike & lower invento
Slide 22: Domestic Steel Market Outlook
22 Domestic Steel Market Outlook ? Steel consumption to rise by 13% as consuming industry recovers Consuming Industry Outlook Auto Ship- building ? Prod'n to grow by 7.5% w/ export recovery, despite weaker domestic mkt. - Auto production (in thousand unit) : 3,513 ('09) ^ 3,777 ('10) ? Shipbuilding
Slide 23: Raw Material: Coal and Iron Ore
23 Raw Material ??? Coal Iron Ore ? Tight S/D due to rising demand in China - Demand grow in ex-China regions as well (EU) - Spot price rise sharply with expectation of economy recovery ? Major 3 demanding quarter index pricing - Agreed on 2Q provisional price with Vale : $110/t (+86%) ? Tight suppl
Slide 24: Stainless Steel Market Trend
24 Stainless Steel Market Trend ? Int'l price remains high due to RM price hike & STS demand growth expectation - E.U : recovery mainly from auto, appliance - China : turned soft due to gov't exit strategy - '10.1Q price increase : E.U 25%, China 15% ? Global market to improve as demand from E.U & A
Slide 25: Agenda
^ 1Q Operating Performance ^ Activities & Accomplishments ^ Steel Industry Environment ^ 2010 Business Plan
Slide 26: 2010 Business Plan (Financials)
26 2009 2010 • Crude Steel Production - Consolidated 29.5 31.1 34.5 36.1 • Finished Product Sales 28.4 32.4 • Sales Revenue - Consolidated 27.0 36.9 31.9 45.2 • Investment 4.9 9.0* * Investment: CAPEX (4.9tn), Overseas Steel (0.8tn), Energy (0.3tn), Growth (3.0tn) (in million ton, trillion KRW) The
Slide 27: 1Q 2010 Operating Performance
1Q 2010 Operating Performance April 13, 2010