Slide 1: 3Q 2005 Operating Performance
3Q 2005 Operating Performance Oct 11, 2005 EX99.1 3Q 2005 Operating Performance Of POSCO
Slide 2: Unaudited non-consolidated figures notice
Figures provided in this presentation are based on unaudited non-consolidated financial statements of the Company for the third quarter of 2005. Certain contents in this presentation are subject to change during the course of auditing process.
Slide 3: Table of Contents
I. 3Q 05 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2005 Business Plan Table of Contents
Slide 4: Production/Sales
Production/Sales (In thousand tons) Production increase via blast furnace refurbishment Weak demand translated into reduced sales volume and high inventory 2005 Total YoY (%)* Cumulative 1Q 2Q 3Q 2005 Total YoY (%)* Cumulative Crude Steel Crude Steel 7,593 7,396 7,698 22,687 1.3 Finished Products (F
Slide 5: Sales by Product
Sales by Product (In thousand tons) Increased sales volume of HR and Plate from completion of rationalization Reduced sales volume of CR, Wire Rod, and STS caused by production cut 2005 Total YoY(%)* Cumulative 1Q 2Q 3Q 2005 Total YoY(%)* Cumulative Hot Rolled 2,290 2,270 2,419 6,979 ? 8.7 Plate 873
Slide 6: Income Statement Summary
Income Statement Summary (In billion KRW) 3Q OP Margin reduced due to increased raw material costs and one time ESOP expense 2005 Total YoY(%)* Cumulative 1Q 2Q 3Q 2005 Total YoY(%)* Cumulative Sales Sales 5,656 5,378 5,458 16,492 16.3 COGS COGS 3,613 3,407 3,835 10,855 8.7 Operating Income Operatin
Slide 7: Financial Structure
Financial Structure (In billion KRW) Debt repayment: KRW 200 bn. (July, '05) Current Asset reduced due to share buybacks for TSE Listing Fixed Assets increased due to incremental capital expenditure in #1 FINEX, #5, 6 CGL, etc Liabilities reduced through continued debt repayment 2005 2005 2005 YoY (
Slide 8: Financial Ratios
Operating Margin (%) 12.9 21.3 23.7 31.5 EBITDA Margin (%) Financial Ratios 15.6 25.5 26.9 32.8 '01 '02 '03 '04 '05.3/4 Debt Ratio (%) 72.8 42.1 52.3 32.6 Equity Ratio(%) '01 '02 '03 '04 '05.3/4 57.9 70.4 65.7 75.4 22.3 81.7 *36.0 *29.3 '01 '02 '03 '04 '05.3/4 '01 '02 '03 '04 '05.3/4 * Three quarter
Slide 9: Key Management Initiatives
I. 3Q 05 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2005 Business Plan
Slide 10: FINEX Project: Key Technologies
FINEX(r) Project 2 Fine Ore Non-coking Coal Power Plant Oxygen Plant CO2 Removal ^ Coal Briquetter ^ Fluidized Bed Reactors ^ Hot DRI Compactor ^ Melter Gasifier ^ Fluidized Bed Reactor : fine ore pre-heated and reduced ^ Hot DRI Compaction : fine DRI compacted to HCI ^ Coal Briquetting ^ Melter-gas
Slide 11: FINEX Project: Emission and Economic Benefit Comparison
FINEX(r) Project 3 Emission Comparison Coke Oven Sinter Plant BF Blast Furnace FINEX 0 50 100 8% 4% 21% SOx NOx Dust Economic Benefit Comparison 92 83 Blast Furnace FINEX Investment FINEX Operationg Cost* Economic benefits expected via savings on CAPEX and Operating Costs Significantly less pollutan
Slide 12: FINEX Project: Recent Demo Plant Status
FINEX(r) Project 4 Recent Demo Plant Status Design Results (Aug '05) Prodn. Annual (thousand ton) 600 720 Prodn. Daily (ton) 1,800 2,150 Rate of Operation % 95 92 Coal Rate (PCR) kg/tHM 850 (0) 820 (250) Continuous operating days day 30 93 Major Developments ? Aiming for a 95% utilization rate, and
Slide 13: Medium-term Technology Development Strategy
Medium-term Technology Development Strategy ? Early layout of pre-emptive system against technology chase from China - Concentrated development in core strategic products - Increase capex for strategic products Securing absolute advantage in future technology competitiveness by focusing more on prod
Slide 14: Investment in Auto Steel Sheet
Investment in Auto Steel Sheet 1 ? Annual production of 5.5 mn.sheets - Additional production of 1.9 mn sheets ? Automobile weight reduction by 10% - Drastic improvements in fuel efficiency and stability ^ TWB Market Trend - Europe: World's largest TWB market with mass production plan - Japan: Aroun
Slide 15: Investment in Auto Steel Sheet: Supply to Automakers
Investment in Auto Steel Sheet 3 70% of total sales of auto steel sheet to be sold to world's 15 largest automotive companies by year 2007 Suzuki 1,000 and above 500 ~ 1,000 100 ~ 500 50 ~ 100 30 ~ 50 1 ~ 30 Amount of Supply (Thou. ton) (Thou. ton) (Thou. ton) (Thou. ton) Mazda Suzuki Mazda '02~'03
Slide 16: Overseas Investment in Raw Materials
l KOBRASCO (Pellet) POSCHROME (Ferrochrome) Mt.Thorley (Coaking Coal) POSMAC (Iron Ore) Foxleigh (Coking Coal) Carborough Downs (Coking Coal) Glennies Creek (Coking Coal) Green Hills (Coking Coal) Overseas Investment in Raw Materials Mine Stake-holding Invest-met (mn $) Annual Purchase (mn tons) Aus
Slide 17: IISI Annual Conference in Seoul
IISI Annual Conference in Seoul IISI Annual Conference in Seoul (mn tons) '04 '05 '06 Global 972 998 1,040~1,053 China 272 300 320~330 The 39th IISI* Annual Conference Conference Result ? 'Adding Value to Our World' - 400 participants from 55 organizations in 35 countries - China's steel makers, inc
Slide 18: Tokyo Stock Exchange Listing
Tokyo Stock Exchange Listing Tokyo Stock Exchange Market - $ 3.6 tn of aggregate value of listed stock, world's 2nd capital market · NYSE $12.7tn., LSE $2.8tn., KSE $0.4tn. ('05.5E) - Low interest rate, high investment potential · Total financial asset in Japan amounts to U$40.4tn. (individuals poss
Slide 19: Improved Overseas Credit-Rating
Improved Overseas Credit-Rating ? Highest credit standing among integrated steel mills in the world Moody's Credit-Rating Upgrade S&P Credit "Outlook" Upgrade ? Credit Rating: A3(Stable) ^ A2(Stable) - Sufficient cash flow generating power - Increased production of high value added products includin
Slide 20: Steel Industry Environment
I. 3Q 05 Operating Performance II. Strategic Initiatives III. Steel Industry Environment IV. 2005 Business Plan
Slide 21: Global Steel Market Trend: Regional Prices
Global Steel Market Trend 1 Uptrend pricing in the West/Stable trend in Japan/ Weak trend in Korea, China and South-East Asia Regional Market Price Trend After price cuts, distributors make efforts to destock inventories, leading to downtrend spot pricing (Thou.KRW) - HR (Seoul^Incheon) : 633 (Jan.'
Slide 22: Global Steel Market Trend: Outlook
Global Steel Market Trend 2 Inventory level reduced in the West/ Slowdown of Chinese steel exports/ Price stabilization expected as regional price gaps narrow Recovery leading to Stable Supply & Demand - Overseas major steel mills expected to carry out profit-focused pricing - Consolidation of Chine
Slide 23: China Steel Industry 1: New Steel Policy
? New Steel Policy Announcement by Chinese Government (July, '05) China Steel Industry 1 8 mn tons and over 8 5~8 mn tons 3~5 mn tons 2~3 mn tons 1~2 mn tons North - -West North - -East Coastal North Mid- South South - -West Coastal East Baoshan Wuhan Shougang ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ Anshan Mere
Slide 24: China Steel Industry 2: Market Trends
91.8 100.7 15.3 6.4 236.2 239.8 18.3 19.8 Prodn. Cons. Export Import (mn tons) < Steel Market Trends in China (Jan. ~Aug., '05) > ? Net import maintained on flat steel, led by stable demand for high-quality Steel 144.4 139.1 3.0 13.4 = + (POSCO-China Sept, '05.) Total Flats Longs China Steel Industr
Slide 25: China Steel Industry 3: Spot Prices and Exports
Continued weakening of spot prices due to oversupply of commodity steel within China China Steel Industry 3 Price: Shanghai Spot Price (Anshan Steel Products HR 3.0mm, CR 1.0mm) Inventory : Huadong Province HR + CR < Spot Price & Inventory Trends in China > '04.4Q '05.1Q 2Q Jul. Aug. +316 ^ +165 ^ +
Slide 26: Domestic Steel Industry 1: Supply-Demand Forecast
GDP growth rate forecasted at 3.7% due to delayed recovery of consumption and slowdown of export growth rate Domestic Steel Industry 1 GDP growth rate : 4.6% ('04) ^ 3.7% ('05) (OECD forecast, Oct. 5, '05 ) Domestic: Despite the overall sluggishness in the steel industry, production growth of automo
Slide 27: Domestic Steel Industry: Key Consuming Industries
Domestic Steel Industry 2 11.3% '04 '05(F) 9.2% 6.5% '04 '05(F) 4.3% - -0.3% '04 '05(F) 1.1% '04 '05(F) (POSRI July, '05) 11.3% 15,143 16,861 3,469 3,693 34.0 33.9 1.3% 117.7 118.0 (YoY) Production Forecast by Major Steel Consuming Industries Shipbuilding (thousnad GT) Shipbuilding orders secured fo
Slide 28: Raw Materials & Freight Trends
Nickel & Scrap Price Raw Materials & Freight Trends Freight Brazil ^ China West Australia ^ China '04.1 '04.12 '05.9 $265 $280 $288 $13,605 $15,205 $ 16,690 $31.8 $43.5 $27.5 $ 18.1 $19.8 $10.2 Nickel Scrap Nickel Price Trend - LME nickel inventory level increasing ^ Price declines to U$ 13,000 per
Slide 29: 2005 Business Plan
I. 3Q 05 Operating Performance II. Key Management Initiatives III. Steel Industry Environment IV. 2005 Business Plan
Slide 30: 2005 Business Plan
2005 Business Plan 30.2 30.8 Production (mn tons) 29.2 29.5 2004 2005(F) Sales (mn tons) 2004 2005(F) ? Rolling Plan 2005 are revised, reflecting recent production and price cuts Above data represents company's internal financial targets and may be subject to change and should not be used for making
Slide 31: 3Q 2005 Operating Performance
3Q 2005 Operating Performance Oct 11, 2005