Slide 1: 3Q 2010 Operating Performance
3Q 2010 Operating Performance October 12, 2010
Slide 2: 3Q Operating Performance agenda
U3Q 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 process
Slide 3: Production · Sales
Production · Sales Production · sales decreased due to facility rationalization Pohang) No.4 Blast Furnace (Jul.3~Oct.7), No.2 Steelmaking (Jul.3~Sept.10), No.2 Con’t Casting (Jun.1~Oct.22) Crude Steel Production (in thousand tons)8,3638,214 7,880 |1.8% ’09.3Q’10.2Q ’10.3Q B/F7,3057,6017,424 High-Mi
Slide 4: Sales by Product
Sales by Product CR increased due to solid auto industry, while HR? Plate decreased Utilization Ratio by Industry (Domestic) Automobile9698 85’09.3Q ’10.2Q 3Q Home Appliance 100 102 103 ’09.3Q ’10.2Q 3Q Pipe 117 102 84 ’09.3Q ’10.2Q 3Q Shipbuilding 88 87 87 ’09.3Q ’10.2Q 3Q * Compared to the peak qu
Slide 5: Income Summary
Income Summary Op. income down due to higher raw mat’l cost, despite raised price Increased usage of expensive raw material (purchased at 2Q & 3Q contract price) — Raw mat’l price change : Iron ore +99% (2Q) a +21% (3Q) / Coal +77% a +6% — High price raw mat’l used : Iron ore 42% (2Q) a 92% (3Q) / C
Slide 6: Summarized Statement of Income (Parent Only)
Summarized Statement of Income (Parent Only) (in billion KRW) ’09.3Q’10.2Q’10.3QYoYQoQ Revenue6,8517,9338,52424.4%7.5% Gross Income1,3512,1991,49610.7%|32.0% (Gross Margin)(19.7%)(27.7%)(17.5%)—C G & A333 36338515.6%6.1% Op. Income1,018 1,8361,1119.1%|39.5% (Op. Margin)(14.9%) (23.1%)(13.0%)— Non-op
Slide 7: Financial Structure
Financial Structure Asset grew due to increased inventory & continued investment Current asset fell as debt rose due to Daewoo Int’l M&A & raw mat’l investments (in billion KRW) ’09.3Q ’10.2Q ’10.3Q YoY QoQ Assets 38,184 44,475 45,810 20.0% 3.0% Current 12,193 15,677 12,813 5.1% |18.3% Non-current 2
Slide 8: Summarized Statement of Financial Position (Parent Only)
Summarized Statement of Financial Position (Parent Only) (in billion KRW) ’09.3Q ’10.2Q ’10.3Q YoY QoQ Current Assets 12,193 15,677 12,812 5.1% |18.3% Cash equivalents 5,802 7,001 3,394 |41.5% |51.5% Notes receivable 2,505 3,073 3,210 28.1% 4.5% Inventory 3,483 5,026 5,715 64.1% 13.7% Long-term Asse
Slide 9: Consolidated Financial Summary
Consolidated Financial Summary Revenue · asset grew due to Daewoo International acquisition No. Consolidated Subsidiaries ’09.3Q ’10.2Q ’10.3Q Total 116 126 151 Domestic 42 45 48 Overseas 74 81 103 Crude Steel Production (in thousand ton) ’09.3Q ’10.2Q ’10.3Q POSCO 7,880 8,363 8,214 Zhangjiagang 193
Slide 10: Consolidated Financial Summary: Income by Sector
Consolidated Financial Summary Income by Sector (in billion KRW) Revenue Operating Income ’09.3Q ’10.2Q ’10.3Q ’09.3Q ’10.2Q ’10.3Q Steel 18,460 9,893 10,507 1,095 1,916 1,137 E & C 1,759 2,262 2,085 58 95 92 I C T 222 211 200 8 6 3 Energy 116 199 214 18 17 19 Steel Support 2,034 2,909 17,104 72 132
Slide 11: Activities & Accomplishments
3Q Operating Performance UActivities & Accomplishments Steel Industry Environment 2010 Business Plan
Slide 12: Activities & Accomplishments: Expand capacity & strengthen marketing
Activities & Accomplishments Expand capacity & strengthen marketing capability Facility addition · upgrade to establish 41Mt domestic capacity — P) No.4 BF revamping completed (Jul.3 rd ~ Oct.7 th ) : capacity increase (3,795 a 5,600m 3 ) — G) New steelmaking (Jul.7 th ) & plate mill (Sept.1 st ) co
Slide 13: Activities & Accomplishments: Accelerate global growth investment
Activities & Accomplishments Accelerate global growth investment Indonesia integrated mill project — Equity : POSCO 70%, Krakatau 30% (1 st 3Mt, total 6Mt) — Signed JVA (Aug), JV incorporated (Sept), groundbreaking (Oct) o complete 1 st stage (~’13/E) India integrated mill project SAIL JV (1 st 3Mt,
Slide 14: Activities & Accomplishments: Strengthen key competencies
Activities & Accomplishments Strengthen key competencies Invest in raw material development - - Acquire 24.5% stake in Australia API iron ore project (Jul) — Acquire 10.2% stake in Africa ACM Manganese project (Aug) Enhance technology leadership — Expand dev’t & sales of “World Best? World First” pr
Slide 15: Activities & Accomplishments: Invest in new growth & green business
Activities & Accomplishments Invest in new growth & green business Expand investment in new material business — Initiate sales of Titanium CR (Jul) : for tubes used in shipbuilding, nuclear plant (95t in 3Q) — Groundbreaking of lab. & plant for marine Lithium extraction technology development (Jul)
Slide 16: Acquisition of Daewoo International complete
Activities & Accomplishments Acquisition of Daewoo International complete (Sept. 20 th , equity 68%) Group-wide PMI(Post Merger Integration) in progress to quickly capture synergy — Selected PMI tasks with participation of group companies (led by POSCO) · 10 tasks : expand steel sales, energy&minera
Slide 17: Subsidiaries' Key Activities
Subsidiaries’ Key Activities POSCO Chemtech, operation consignment for G) coking plant (Aug. 16 th ) — Expected sales revenue : KRW 63.8 bn (Aug.16th ’10 ~ Aug.15th ’11) Steel POSCO C&C, enter Metal PCB* material business * For LED TV, PCB platform • Support — Introduce production line (Sept), quali
Slide 18: Steel Industry Environment
3Q Operating Performance Activities & Accomplishments Steel Industry Environment 2010 Business Plan
Slide 19: Global Steel Market
Global Steel Market Steel price stabilizes as crude steel production decline Crude Steel Production (in million ton) (%) * worldsteel (Sept.’10) ___ 124 * YoY 113 ___ ___ 39 Production (L) ___ _87 ___ ___ __ Growth Rate (R) 4 ___ ___ _-24 Jan.’09 _ Mar May _ Jul _Sep Nov Jan.’10 _ _ __May _ _Jul _ H
Slide 20: China Steel Market
China Steel Market Net export fell as gov’t’ energy policy results in production cut Local gov’t limits electricity supply in Herbei (Sept.4 th ) : operation halted in 57 mills — Crude steel production (monthly,Mt) : 56.1 (May) a 53.8 (Jun) a 51.7 (Jul) a 51.6 (Aug) Demand solid but, nominal cons’n
Slide 21: Domestic Steel Market
Domestic Steel Market Despite stable demand, new capacity leads to lower import in 2H Supply · Demand Forecast * POSRI (Oct.’10) (in thousand ton) 2009 1H 2H 2010 YoY 2011 Apparent Demand 45,411 27,087 28,291 55,378 22% 55,904 Export 20,541 11,498 11,271 22,770 11% 23,164 Production 56,919 32,765 34
Slide 22: Raw Material
Raw Material Iron Ore ’10.4Q price agreed — 10 ~ 13% decrease over 3Q price Tight S/D to continue in ’11.1Q — Spot price turned strong since Jul.’10 — Strong price to continue w/ solid steel market Coal ’10.4Q price negotiation in progress — HCC $209/t (|7%), PCI $150 (|17%) agreed — In negotiation
Slide 23: Stainless Steel Market Trend
Stainless Steel Market Trend STS STS Mill raised price as Ni price rises — China : spot price up 15% in last 3 months (U$2,500 a U$2,900) — Europe : turned uptrend since September 4Q demand to recover due to seasonal demand & low consumer inventory Nickel · Chrome Nickel — Ni price remained strong a
Slide 24: 2010 Business Plan
3Q Operating Performance Activities & Accomplishments Steel Industry Environment 2010 Business Plan
Slide 25: 2010 Business Plan
2010 Business Plan Adjusted guidance reflecting changes in management environment P) #3 steelmaking construction delay & G) new plate mill operation delay Slow recovery in export market (’10.2H export ASP : original $819/t a revised $802/t) (in million ton, trillion KRW) 2009 2010 • Crude Steel Prod