Posco Holdings Inc. · KRX:005490
Posco — Corporate Update (January 2008)
29 slides from Posco's corporate update, Jan 11, 2008
Slide 1: 2008 CEO Forum
eosco 2008 CEO Forum 2008. 1.10.
Slide 2: 2007 Operating Results
2007 Operating Results Activities & Accomplishments 2 1 2008 Business Plan 3 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.
Slide 3: Production/Sales
Production/Sales ? Consolidated crude steel production of 33 million ton ? Production up due to completion of FINEX & full operation of Zhangjiagang STS ? High value-added, strategic product sales continue to rise (eg. automotive steel) 2005 2006 2007 POSCO 30,545 30,053 31,063 Zhangjiagang STS - 23
Slide 4: Income Summary
2005 2006 2007 2005 2006 2007 26,302 21,695 25,842 20,043 22,207 6,083 5,912 4,389 3,892 4,308 31,592 4,902 3,995 3,207 3,679 Income Summary ? Consolidated sales of 32 trillion (KRW), operating income of 5 trillion ? Solid steel sector earnings as strategic product sales increase & cost savings cont
Slide 5: Quarterly Income Summary
? Earnings down due to BF revamping & STS downturn (in billion KRW) ? Sales ? ? Operating Income ? (in billion KRW) 1Q 2Q 3Q 4Q Crude Steel Carbon STS 7,051 501 7,343 473 7,545 339 7,418 393 Sales Carbon STS 6,804 491 7,113 436 7,084 303 6,971 379 (in thousand tons) ? Major issues for carbon steel (
Slide 6: Summarized Income Statement (POSCO)
2005 2006 2007 2005 2006 2007 YoY(%) Revenue Revenue 21,695 20,043 22,207 10.8 Gross income (Gross margin) Gross income (Gross margin) 6,992 (32.2%) 5,010 (25.0%) 5,601 (25.2%) 11.8% - - S G & A S G & A 1,080 1,118 1,292 15.6% Operating income (OP margin) Operating income (OP margin) 5,912 (27.2%) 3
Slide 7: Financial Structure
Financial Structure ? As profit & investment increase, consolidated assets reach 36 trillion ? Investment increased for competitiveness in steel & new growth engine (energy, IT) (in billion KRW) (in billion KRW) Asset Asset Asset Liability Liability Liability Equity Equity Equity 2005 2006 2007 2005
Slide 8: Summarized Balance Sheets (POSCO)
(in billion KRW) 2005 2006 2007 2005 2006 2007 YoY(%) Current assets Current assets 8,399 7,871 8,768 11.4% Cash equivalent assets* Notes receivable Inventory 3,351 2,110 2,719 3,213 1,806 2,735 3,566 1,896 3,221 11.0% 5.0% 17.8% Long-term assets Long-term assets 15,808 18,492 21,725 17.5% Investmen
Slide 9: Financial Ratios
(in billion KRW) ? Operating Income ? ? EBITDA ? ? Return on Equity ? ? Liabilities-to-Equity Ratio ? Financial Ratios (in billion KRW) 6,500 7,394 5,450 6,029 25.5 27.2 (%) (%) 19.4 32.8 34.1 27.2 32.6 24.0 21.1 26.3 22.5 15.5 24.4 27.2% 19.4% 15.9 5,054 5,912 3,892 4,308 2004 2005 2006 2007 2004 2
Slide 10: Valuations
Valuations ? Shares of POSCO & subsidiaries outperform KOSPI ? 2007 Share Price Trend ? ? EPS ? ? Market Cap. ? '06.12/E '07.3/E '07.6/E '07.9/E '07.12/E 1,434 309.0 15.8 14.7 17.0 7.0 '06.12 +32% +86% +164% +112% +44% +59% 1,897 575.0 41.6 31.1 24.4 11.2 KOSPI POSCO POSREC Samjung P&A POCOS POSDATA
Slide 11: Activities & Accomplishments
2007 Operating Results Activities & Accomplishments 2 1 2008 Business Plan 3
Slide 12: World's 1st commercialization of FINEX technology
World's 1st commercialization of innovative FINEX technology ? Model plant ('96) ^ Demo plant ('03) ^ Commercialized FINEX plant (May.'07) ? Verified 1.5mn tons/yr productivity & secured cost competitiveness ^ Characteristics of FINEX technology ? By eliminating sintering & coking plant, reduce inve
Slide 13: 2007 Key Activities: Investments for global growth
2007 Key Activities ? Investments for global growth continue ? Secure production bases in Asia where growth potentials are high - Vietnam CR Mill groundbreaking(Aug) : 1.2mn tons/yr (FH 0.5, CR 0.7) ? Set up a base for network linking S.E.A market with India & China - Benxi CR Mill in China completi
Slide 14: Facility upgrade for capacity and premium product expansion
Facility upgrade for capacity and premium product expansion Crude Steel HR CR Plate ? Production by Facilities ? ? Gwangyang No. 3 BF revamping(Nov) : capacity increase by 650thous tons/yr ? Dephosphorizer in Pohang(Mar) & Gwangyang(Dec) : quality improvement & mass production of premium steel ? Gwa
Slide 15: Investment in raw material & new growth engine
? Active investment in raw material & new growth engine ? Equity in Cockatoo coal mine, Australia(Nov) : 1Mt/yr long-term contract ('10~) ? Secure raw material and improve self-sufficiency ? Secured nickel mine & began building Fe-Ni plant (May) : Ni 30Kt/yr ? Nickel mine in New Caledonia, Fe-Ni pla
Slide 16: Global Projects
Vietnam CRM Groundbreaking Mexico CGL Groundbreaking API pipe plant founded, U.S Benxi CRM, China Complete Equity in Cockatoo coal mine, Australia Equity investment molybdenum mine Ferronickel Plant, Gwangyang M&A MEGS, Malaysia Integrated mill in process 1 < Overseas Processing Centers Completed :
Slide 17: 2007 Total Investment
Category Invest Major Activities Strategic product 904 Pohang dephosphorizer, Gwangyang No. 3 HR rationalization Capacity increase 483 Commercialized FINEX Maintenance, cost saving, environment 1,029 Gwangyang No. 3 BF Overseas, strategic alliance, raw material 1,333 India, Vietnam, Mexico, Nickel E
Slide 18: Shareholder Value / Credit Ratings
Shareholder Value / Credit Ratings ? 3% of share buyback ^ Treasury stock: 11,647K shares (13.4%) (as of '07/E) ? '07 Dividend (tentative) ? KRW 10,000 (includes interim dividend:2,500won) ? Dividend Yield : 1.7% ('07/e share price) ? Payout Ratio : 20.5% 2002 2003 2004 2005 2006 2007 Dividend (Inte
Slide 19: Key Subsidiaries' Activities
? Steel ? Intensive promotion of high value-added specialty products (POSCO SS) ? Install new forging line(Dec.'05 ~ Jan.'08) : for tools, industrial use 62 thous tons/yr ? Develop and promote "Only One Products" for market differentiation (POCOS) ? 15 new developments including Aluminum anti-finger
Slide 20: Key Subsidiaries' Activities: IT and Energy
Key Subsidiaries' Activities ? IT (POSDATA) ? Developed core WiBro(WiMAX) technology & began global business ? World's first Internet Protocol v6 development with KT(Jan) ? MOU with KT to build Pohang WiBro Town(Dec) ? Established WiBro Total Solution system - Found WiBro-ready equipment company (PO
Slide 21: 2008 Business Plan
2007 Operating Results Activities & Accomplishments 2 1 2008 Business Plan 3
Slide 22: 2008 Steel Market Outlook
2008 Steel Market Outlook Strong market expected mainly in BRICs & emerging market ? Demand industry grows steadily but at slower rate - Auto : slight decrease in domestic & export growth (6.4 ^ 3.9%) - Ship : stronger growth with 4yrs of order back-log(4.9 ^ 11.2%) ^ Domestic steel consumption fore
Slide 23: 2008 Steel Market Outlook: China and Global
2008 Steel Market Outlook ? Consumption & production up due to continued growth in demand industry - Auto production : 8.15('07)^9.5 million('08), Ship orders: 8.4('07)^9 million GT('08) ? Net export at '07 level due to export control measures - 53Mt of net export expected in '08 ? Restructuring of
Slide 24: STS Market Outlook
STS Market Outlook Market to recover in 1H due to inventory adjustment S T S '06 '07 '08(e) ?? ? 3.73 3.5 3.88 ?? 9.24 8.17 8.92 ??? 9.69 9.26 9.6 ?? 5.29 7.5 8.9 ? STS Production Forecast ? (in million tons) 28.0 28.4 31.3 China Asia E.U U.S & other (Eramet, '07.12) '06 '07 '08(e) ?? 1.38 1.38 1.48
Slide 25: 2008 Consolidated Business Plan: Expand investment for global growth
2008 Consolidated Business Plan Expand investment for global growth ? India: acquire mining license & begin foundation work for plant ? Central gov't approval for prospective mining right in Kandahr state ? Completes acquisition of gov't-owned-land & groundbreaking for port · mill ? Vietnam: Complet
Slide 26: 2008 Consolidated Business Plan: Strategic products
Establish foundation to be market leader in strategic product ? Continue investment to expand production and sales of strategic product ? Renovate & rationalize electrical steel plants - NO: add'n pickling & annealing line, capacity for premium steel up by 320Kt/yr (Apr.'08~Oct.'09) - GO: capacity i
Slide 27: 2008 Consolidated Business Plan: E&C, Energy, IT
? Expand LNG power plant & secure stable fuel supply ? 1st stage 1,000MW(Jan.'07~Jun.'11), 2nd 1,000MW(Jul.'11~Jun.'15) ? Completion of fuel cell plant & secure sales base ? 1st stage 50MW (Oct.'07~Aug.'08), 2nd 50MW (Jan.'10~Dec.'10) ? Continue to expand overseas & plants projects ? Overseas: plant
Slide 28: 2008 Investments
2008 Investments ? Consolidated : KRW 8.0tn ? Invest Invest % Steel 4.9 61% E&C 0.2 3% Energy & New Business 2.9 36% Total 8.0 100% (KRW trillion) * Internal facility investment (2.9 tn) - Capacity expansion 1.2, Strategic product 0.5 Maintenance & Cost savings 1.1, etc ???? ???? ??? ???? 28815 1224
Slide 29: 2008 Business Plan
The data above represents the Company's internal objectives, thus should not be used as a basis for investment decisions 2008 Business Plan 2007 2007 2008 2008 Consolidated POSCO Consolidated POSCO Crude Steel Prod. 32.8 31.1 34.7 32.9 Sales Volume 32.2 29.6 34.1 31.2 Revenue 31.6 22.2 34.3 23.9 Ope