Slide 1: 3Q 2007 Operating Performance
3Q 2007 Operating Performance October 16, 2007
Slide 2: Agenda
Agenda 3Q '07 Operating Performance Activities & Accomplishments 2 1 Steel Industry Environment 3 2007 Business Plan 4 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 au
Slide 3: Production/Sales
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q YoY QoQ Crude Steel Crude Steel 7,610 7,817 7,883 3.6% 0.8% Finished Products (FP) Finished Products (FP) 7,391 7,611 7,537 2.0% ^1.0% FP Sales FP Sales 7,289 7,549 7,387 1.3% ^2.1% Domestic 5,106 5,221 5,117 0.2% ^2.0% Exports (%) 2,183 (29.9) 2,328 (
Slide 4: Sales by Product
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q YoY QoQ Hot Rolled 2,192 1,991 1,990 ^9.2% ^0.1% Plate 883 995 1,000 13.3% 0.5% Wire Rod 458 531 504 10.0% ^5.1% Cold Rolled 2,817 3,024 3,095 9.9% 2.3% Elec. Steel 176 238 214 21.6% ^10.1% S T S 488 436 303 ^37.9% ^30.5% Others 275 334 281 2.2% ^15.9%
Slide 5: Sales, operating income down due to slowdown in STS market
Sales, operating income down due to slowdown in STS market 2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q YoY QoQ Sales 5,298 5,815 5,257 ^0.8% ^9.6% CoGS 3,954 4,245 3,831 ^3.1% ^ 9.8% Operating Income 1,064 1,247 1,073 0.8% ^14.0% (OP Margin) (20.1) (21.5) (20.4) (0.3%) (^1.1%) Net Income 882 1,1
Slide 6: Summarized Income Statement (POSCO)
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q QoQ Revenue Revenue 5,298 5,815 5,257 ^9.6% Gross income Gross income 1,343 1,570 1,426 ^9.2% (Gross Margin) (Gross Margin) (25.3%) (27.0%) (27.1%) (0.1%) S G & A S G & A 279 323 353 9.3% Operating income Operating income 1,064 1,247 1,073 ^14.0% (Oper
Slide 7: Financial Structure
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q YoY QoQ Assets Assets 25,194 28,686 29,586 17.4% 3.1% Current Assets 7,548 8,204 8,472 12.2% 3.3% Non-current Assets 17,646 20,482 21,114 19.7% 3.1% Liabilities Liabilities 4,514 5,594 5,725 26.8% 2.3% Debt 2,570 2,809 2,706 5.3% ^3.7% S/H Equity S/H E
Slide 8: Balance Sheet
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q QoQ Current assets Current assets Current assets 7,548 8,204 8,472 3.3% Cash equivalent assets* Notes receivable Inventory Cash equivalent assets* Notes receivable Inventory 3,051 1,760 2,596 2,950 1,939 3,164 3,191 1,910 3,183 8.2% ^1.5% 0.6% Long-ter
Slide 9: EBITDA, Financial Ratios, Share Price & Market Cap
1,673 1,469 1,511 1,501 EBITDA & EBITDA Margin Return on Equity Liabilities-to-Equity Ratio 28.8 (KRW bn,%) 27.7 27.9 26.3 18.7 15.3 15.5 18.1 (%) 24.2 21.8 21.0 24.4 (%) '06.3Q 4Q '07.1Q 2Q 3Q '06.3Q 4Q '07.1Q 2Q 3Q '06.3Q 4Q '07.1Q 2Q 3Q 1,516 28.8 17.3 24.0 245,000 309,000 395,000 443,500 34.4 26
Slide 10: Consolidated Financial Summary
Achieved 32 million ton crude steel production capacity 2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q YoY QoQ I/S Sales 6,650 8,234 7,423 11.6% ^9.7% I/S OP Income (OP Margin) 1,198 (18.0%) 1,417 (17.2%) 1,120 (15.1%) ^6.5% (^2.9%) ^21.0% (^2.1%) I/S Net Income 882 1,081 800 ^9.3% ^26.0% B/S Asset
Slide 11: Consolidated Financial Summary: Income by Sectors
2006 3Q 2007 2Q 2007 3Q 2006 3Q 2007 2Q 2007 3Q QoQ Sales Steel E & C Energy IT & Others 7,462 809 107 119 9,130 895 112 113 8,237 861 148 116 ^9.8% ^3.9% 3.2% 2.7% Sales Total 8,497 10,250 9,362 ^8.7% Sales Consolidated 6,650 8,234 7,423 ^9.9% OP Income Steel E & C Energy IT & Others 1,138 90 18 6
Slide 12: Consolidated Financial Summary: Financial Structures by Sectors
Asset Asset Liability Liability Equity Equity 2Q 3Q 2Q 3Q 2Q 3Q Steel E & C Energy IT & Others 35,659 3,052 953 784 36,669 3,237 967 782 9,308 1,742 446 336 9,543 1,844 454 319 26,351 1,310 507 448 27,126 1,393 513 463 Total Total 40,448 41,655 11,832 12,160 28,616 29,495 Consolidated Consolidated 3
Slide 13: Operating Performances of Listed Subsidiaries
POCOS (Coated steel) (bn KRW) '06.3Q 4Q '07.1Q 2Q 3Q Sales 145.3 156.1 154.3 178.0 166.7 OP Income 7.0 2.7 2.7 2.6 4.4 Net Income 12.6 4.1 1.9 3.3 3.6 3Q 2Q '07.1Q 4Q '06.3Q (bn KRW) 5.2 2.5 4.3 3.6 Net Income 7.1 6.3 2.5 5.6 4.3 OP Income 74.0 67.8 68.4 70.0 64.7 Sales POSDATA (IT) POSREC (Refracto
Slide 14: Agenda
Agenda 3Q '07 Operating Performance Activities & Accomplishments 2 1 Steel Industry Environment 3 2007 Business Plan 4
Slide 15: Progress on India Project
Progress on India Project Gov't approvals for mill & infra construction reaches final stage ? Forest diversion awaits Supreme Court's announcement, lease of gov't land (90% of total) within this year ? Hearings for prior applicants in progress, most eligible to be recommended to Centre Env't approva
Slide 16: FINEX Operation Status
FINEX(r) Operation Status Operation status Normal level of operation & lowest-cost operation soon to be achieved ? Achieved target production (4,300ton/day), Coal ratio to meet target by end of '07 Plans ? FB/Melter de-bottlenecking ? HCI/Coal operation target secured Creditability test ('07.4~7) ?
Slide 17: Growth in Emerging Markets
? Overview - Construction : Jul. '04 ~ Jul. '07 (36months) - Location : Liaoning, Benxi - Product : CR 1.8Mt (CR 0.8,GI/GA 0.8,F/H 0.2) - Equity stake : POSCO 25%, Benxi 75% ? Benefits - Expand supply base for automotive products - Stable supply to subsidiaries (Dalian, Zhangjiagang, Shunde) ? Overv
Slide 18: Investment on Domestic Facilities
Investment on Domestic Facilities ? Overview - Construction : Aug.'08 ~ Jul.'10 (24months) - Facility : steel making, plate(2Mt/yr) backup facilities (oxygen, electricity, port) ? Benefits - Meet growing demand from shipbuilder - Prepare for premium strategic mkt (ship,API) ? 7Mt of plate production
Slide 19: Major Rationalizations in 4Q
Major Rationalizations in 4Q ? Overview - Period : Oct 6th, '07 ~ Dec. 10th (66days) ? Benefits - Production increase by capacity expansion · Production : 3200 ^ 3870Kt (+21%) · Capacity : 3,800 ^ 4,600m3 Renovation of Related Facilities Renovation of Gwangyang#3 BF #2 Continuous Casting Line - Peri
Slide 20: Investment for Stable Procurement of Raw Material
Investment for Stable Procurement of Raw Material ? Overview - Company : Cockatoo Coal Ltd. (IPO in Oct.'05) - Mine : Queensland, NSW - Coal type : PCI & thermal Coal - Contract (Long-term) : 1Mt/yr - Stake acquired : 19.99% (Largest shareholder) ? Benefits - Stable supply & improved self-sufficienc
Slide 21: Continuing Cost Savings and Interim Dividend
Continuing Cost Savings ? '07 target continued to increase ? Long-term, stable dividend policy - Interim dividend introduced since year 2000 - Increase as results improve ? Details - Per share amount : KRW 2,500 won - Total amount : KRW 189.5 billion won - Payment date : Aug. 3rd 2007 Interim Divide
Slide 22: Subsidiary Investments and Foreign Projects
? POCOS : Rationalization of #1CCL (Color) - Period : Dec.'07 ~ Jan.'08 - Capacity : 155 ^ 183 (increased by 28Kt/yr) - Benefit : productivity up for premium products ? POSCO SS : Installment of Forging Line - Period : Dec.'05 ~ Jun.'07 - Capacity : 62Kt/yr (tool 32, industrial 30Kt) · Jun. 22nd '07
Slide 23: Energy and IT Businesses
? Fuel Cell Business - MOA with Pohang City (May.'07) - MOU with KEPCO (Aug.'07) - Fuel cell plant groundbreaking ceremony (Oct.'07) ? Construct 100MW/yr capacity plant by 2010 ? Power Plant Expansion Business - Secured land for expansion (Jun.'07) - Confirmed to proceed the expansion project based
Slide 24: Demonstrating Corporate Citizenship
Demonstrating Corporate Citizenship Company for Global Sustainability (GS Sustain Focus, Jul.'07) (Goldman Sachs) - Well-developed Corporate Governance, Improved Transparency in Corporate Management - Demonstration of Transparent Accounting System with Healthy Financial Structure Company for Excelle
Slide 25: Agenda
Agenda 3Q '07 Operating Performance Activities & Accomplishments 2 1 Steel Industry Environment 3 2007 Business Plan 4
Slide 26: Global Steel Market Long-term Forecast
BRICs & emerging market lead strong growth in global demand (IISI, Oct.'07) Global Steel Market Long-term Forecast Steel Demand Growth by Area (Source : IISI) Global Steel Demand Outlook (Nominal) (in million tons) Demand from China and India continue double digit growth Rapid growth from emerging m
Slide 27: Global Steel Market Prices
Global Steel Market Global steel prices maintain strong as market enters into a seasonal upturn (U$/T) Remains high as demand industry stays healthy & meets seasonal upturn Guangzhou : 449(Dec) ^ 476(Mar.'07) ^ 466(Jun) ?469(Jul) ? 498(Aug) ? 512(Sept) Turning strong as local mills raise price Midwe
Slide 28: China Steel Industry Trend
Domestic price turns strong as demand industry stays healthy & meets on-season China Steel Industry Trend '06.1 2 3 4 5 6 7 8 9 10 11 12 '07.1 2 3 4 5 6 7 8 9 10 Baoshan($493/4Q) Wuhan($518/Oct) Anshan($493/Oct) 300 400 500 600 (U$) 335 485 434 431 499 Spot Price $512 375 499 493 316 396 436 545 548
Slide 29: Domestic Steel Industry
Domestic Steel Industry (in thousand tons) Market stable as demand industries (auto, ship, equipment,etc) remain strong '06 '07 YoY(%) 1H '06 1H '07 YoY(%) Consumption 24,220 49,634 27,829 54,045 8.9% Production 27,811 57,239 30,877 61,446 7.3% Import 5,417 10,591 6,684 11,989 13.2% Export 9,008 18,
Slide 30: Stainless Steel Market
Stainless Steel Market 12 '07.1 2 3 4 5 6 7 8 9 ?? 5365 5433 5359 5462 5694 5898 6038 5458 4464 4269 ?? 3742 4010 4133 4457 4692 4854 4400 3614 3400 3690 STS CR Price Trend China (Spot) Germany May.'07 Dec.'06 3,700 6,000 5,400 4,900 Sept 3,700 4,270 (U$/ton) Recovery of Asia market after production
Slide 31: Agenda
Agenda 3Q '07 Operating Performance Activities & Accomplishments 2 1 Steel Industry Environment 3 2007 Business Plan 4
Slide 32: 2007 Business Plan
2006 2006 2007 2007 (%) (%) Consolidated POSCO Consolidated POSCO Consolidated POSCO Crude Steel Production 31.2 30.1 32.4 30.6 3.8% 1.7% Sales Volume 30.9 28.5 32.0 29.4 3.6% 3.2% Revenue 25.8 20.0 31.1 21.8 20.5% 9.0% Operating Income 4.4 3.9 5.2 4.5 18.2% 15.4% Investment 4.9 3.8 6.8 5.8 38.8% 52