Slide 1: 3Q 2012 Operating Performance
3Q 2012 Operating Performance October 23, 2012
Slide 2: Agenda and unaudited figures notice
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. 3Q Operating Performance ^ Consolidated Performance - POSCO Operating Performance 2012 Business Plan Bu
Slide 3: Consolidated Performance
^ Based on the aggregation of each sector 3/25 (billion KRW) (billion KRW) Revenue Revenue Revenue Operating Profit Operating Profit Operating Profit Net Profit Net Profit Net Profit (billion KRW) (billion KRW) '11.3Q '12.2Q '12.3Q '11.3Q '12.2Q '12.3Q '11.3Q '12.2Q '12.3Q Steel Steel 13,805 13,582
Slide 4: Financial Structure
Financial Structure ^ Based on the aggregation of each sector 79,851 79,662 38,306 37,453 42,209 41,544 77,935 37,727 40,208 4.5% 6.9% 2.3% Return on Equity 92.2% 88.7% Liability to Equity Liability to equity ratio was lowered with debt reduction Assets Liabilities Equity 2011.3Q 2012.2Q 2012.3Q 201
Slide 5: Summarized Statements of Income
2011. 3Q 2012. 2Q 2012. 3Q 2011. 3Q 2012. 2Q 2012. 3Q QoQ(%) Revenue Revenue 16,953 16,488 15,739 ^ 4.5 Gross Profit Gross Profit 2,279 2,206 1,924 ^ 12.8 (Gross Margin) (Gross Margin) (13.4%) (13.4%) (12.2%) ^ Selling & Admin. Expenses Selling & Admin. Expenses 892 928 926 ^ 0.2 Other Operating Pro
Slide 6: Summarized Statements of Financial Position
^ Cash equivalents: cash & cash equivalents, other short-term financial assets 2011. 3Q 2012. 2Q 2012. 3Q 2011. 3Q 2012. 2Q 2012. 3Q QoQ (%) Current Assets Current Assets 33,375 35,288 33,997 ^ 3.7 Cash Equivalents 8,315 8,401 8,710 3.7 Accounts Receivable 11,026 12,667 12,084 ^ 4.6 Inventories 12,2
Slide 7: 3Q Operating Performance - Consolidated Performance
3Q Operating Performance - Consolidated Performance ^ POSCO Operating Performance 2012 Business Plan Business Environment 3Q Key Business Activities
Slide 8: Production & Sales
(thousand tons) 2011.3Q 2012.2Q 2012.3Q Carbon Steel 8,982 8,907 9,207 S T S 488 498 455 2011.3Q 2012.2Q 2012.3Q Domestic 5,066 5,246 5,216 Export 3,619 3,423 3,711 Inventory 958 970 952 Production & Sales 2011.3Q 2012.2Q 2012.3Q 9,405 9,662 9,470 2011.3Q 2012.2Q 2012.3Q 8,669 8,927 8,685 41.7% 39.5
Slide 9: Sales by Product
Sales of shipbuilding plates went up while sales to automakers and home appliances manufacturers slightly decreased Sales by Product * Includes HR Plate 1,974 1,981 1,999 619 666 622 896 838 1,049 Automobile Home Appliances Shipbuilding 2011.3Q 2012.2Q 2012.3Q 2011.3Q 2012.2Q 2012.3Q 2011.3Q 2012.2Q
Slide 10: Income
9,223 8,910 9,961 1,057 10.9% 11.5% 9.2% Operating Margin 819 1,087 Revenue Operating Profit 2011.3Q 2012.2Q 2012.3Q 2011.3Q 2012.2Q 2012.3Q Discounted steel price led to a decline in revenue and operating profit Income 2011.3Q 2012.2Q 2012.3Q 2011.3Q 2012.2Q 2012.3Q QoQ Carbon Steel Sales Price 1,0
Slide 11: Financial Structure
Liability to equity ratio decreased on the back of debt repayment Financial Structure 52,479 52,546 2012.6/E 2012.9/E Change +67 38,662 38,155 +507 14,324 13,884 Debt 11,048 10,744 ^440 ^304 2011 2012.2Q 2012.3Q 2011 2012.2Q 2012.3Q From '11/E Liability to Equity 40.2% 37.5% 35.9% ^4.3%p Equity to A
Slide 12: 3Q Key Business Activities
3Q Operating Performance - Consolidated Performance - POSCO Operating Performance ^ 3Q Key Business Activities 2012 Business Plan Business Environment
Slide 13: Secured profitability by product differentiation
Carbon steel avg. operating margin Secured profitability by product differentiation Emphasis on the sales of high value-added products Energy Steel Automotive Sheets Full Line-up for automotive sheet production tailored to Japanese carmakers All 313 specifications used by Japanese carmakers will be
Slide 14: Expanded customer base and strengthened optimal production
Full production ^ Optimal production Expanded customer base and strengthened optimal production Stronger demand base & Optimal production Domestic M/S Expand domestic market share Respond to imports of Chinese low-price products, mainly HRC & plate - Sales by KAM* grew: 2Q 1,368 ^ 3Q 1,437 thousand
Slide 15: Management focused on cash flow generation
Improved cash flow and saved costs Management focused on cash flow generation - Raw materials inventory down by 181 bil KRW, QoQ · Decrease in raw materials inventory days : Iron ore by 1 day, Coking coal by 4 days - Semi-product inventory worth of 120 bil KRW declined ^ Used for debt repayment Cash
Slide 16: Capex Budget and Execution
Execute capex plan in a flexible way to respond to market change Capex Budget and Execution (As of 3Q/E, on a consolidated basis) Investment Execution Consolidated (8.4) 380 Capex Reduction Early '12 Adjusted 380 8.9 8.4 Domestic Steel (2.6) Overseas Steel (2.4) Raw Materials Investment (0.7) E&C/En
Slide 17: Non-steel and affiliate business updates
POSCO E&C: Posted 3Q operating profit of 109.6 bil KRW(QoQ +107%) with cumulative new orders worth 7.7 tril KRW - Revenue and operating profit picked up with the construction works of Mexico #2 CGL and Indonesian mill in full swing - Order-taking expanded outside the group(new orders within the grou
Slide 18: Business Environment
3Q Operating Performance - Consolidated Performance - POSCO Operating Performance 2012 Business Plan ^ Business Environment 3Q Key Business Activities
Slide 19: Global steel market outlook
? Steel PMI(Purchasing Managers' Index) picked up in Sep. although remaining below the baseline ? Steel price gained US$50 compared to that of early Sep. signaling a bottom-out ? China will continue to post a modest growth of 3% due to the absence of government-led large-scale stimulation policy see
Slide 20: Demand industries outlook
* POSRI('12.10) Automobile Construction Shipbuilding • Slow domestic and export demand lowered 3Q production, slight recovery forecast in 4Q Production(thousand units): 4,657 ('11)^ 4,457 ('12) ('12. 1Q: 1,175 / 2Q: 1,205 / 3Q: 936 / 4Q: 1,141) • Moderate recovery in housing and non-housing sectors
Slide 21: Coking coal and iron ore prices
Coking Coal Improved supply with the BMA strike ended, and drop in China's demand led to a fall in spot prices after the end of July (Jul. US$205 ^ Sep. US$144/ton) "4Q Price: HCC FOB US$170/ton" (US$/ton) *Platts HCC Peak Downs FOB Australia (Monthly avg.) HCC price is forecast to remain moderately
Slide 22: Raw materials: nickel and chrome
Raw Materials Ni: Global economic uncertainties and seasonality kept price weak, which turned around after the Fed's announcement of QE3 Cr: Summer seasonality and poor market conditions resulted in weak demand and price 3 Q Ni: Restocking demand will raise price while volatility stemmed from global
Slide 23: 2012 Business Plan
^ 2012 Business Plan 3Q Key Business Performance Business Environment 3Q Operating Performance - Consolidated Performance - POSCO Operating Performance
Slide 24: 2012 Business Plan
2011 2012(F) Revenue (in trillion KRW) 68.9 67.2 - POSCO Revenue (^) 39.2 36.3 Crude Steel Production (in million tons) 37.3 38.2 Product Sales (^) 34.5 35.2 Investment (in trillion KRW) 8.1 8.4 - POSCO Investment (^) 5.7 3.9 Minimize decrease in profitability and secure financial soundness 24/25 20
Slide 25: 3Q 2012 Operating Performance
3Q 2012 Operating Performance October 23, 2012