Slide 1: 2010 CEO Forum, January 14th 2010
2010 CEO Forum January 14th 2010
Slide 2: 2009 Operating Results / Activities & Accomplishments / 2010 Business Plan
^ 2009 Operating Results ? Activities & Accomplishments ? 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 down due to weak global steel market 2007 2008 2009 POSCO 31,063 33,136 29,530 Zhangjiagang STS 780 658 747 POSCO SS 936 874 773 (in thousand ton) 2007 2008 2009 2007 2008 2009 (in million ton) < Crude Steel Production > < Finished Product Sales > 33.1 34.7 29
Slide 4: Income Summary
Income Summary ? Revenue & earnings down as sales price dropped 2007 2008 2009 Steel 4,653 7,085 3,411 E&C 301 300 346 Energy 58 62 81 IT, etc. 17 25 35 2007 2008 2009 Steel 34,715 46,470 40,901 E&C 3,915 5,567 7,781 Energy 567 744 513 IT, etc. 523 602 600 * Sales by sectors : includes inter-company
Slide 5: POSCO Quarterly Income
POSCO Quarterly Income ? Operation improved in 2H w/ mkt. recovery, low RM cost, cost cut < Revenue > < Operating Income > 6,471 6,344 6,851 373 171 1,018 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 7,288 1,587 14.9 21.8% Op. Margin 5.8 2.7 1Q 2Q 3Q 4Q Utilization Ratio Utilization Ratio 75% 85% 92% 100% Crude Steel Pr
Slide 6: Summarized Statement of Income (POSCO)
Summarized Statement of Income (POSCO) 2007 2008 2009 2007 2008 2009 YoY(%) Revenue Revenue 22,207 30,642 26,954 ^12.0 Gross income Gross income 5,601 7,935 4,380 ^44.8 (Gross margin) (Gross margin) (25.2%) (25.9%) (16.2%) - S G & A S G & A 1,292 1,395 1,232 ^11.7 Operating income Operating income 4
Slide 7: Financial Structure
Financial Structure ? Consolidated asset grew to 50 trillion KRW ? Investment grew & earnings solid / leverage reflects healthy financials Asset Asset Asset Liability Liability Liability Equity Equity Equity 2007 2008 2009 2007 2008 2009 2007 2008 2009 Steel 37,417 47,168 50,802 9,458 14,923 14,959
Slide 8: Summarized Statement of Financial Position (POSCO)
Summarized Statement of Financial Position (POSCO) 2007 2008 2009 2007 2008 2009 YoY(%) Current assets Current assets 8,768 13,693 12,918 ^5.7 Cash equivalent assets* 3,566 3,722 6,754 81.5 Notes receivable 1,895 3,229 2,684 ^16.9 Inventory 3,221 6,416 2,996 ^53.3 Long-term assets Long-term assets 2
Slide 9: Activities & Accomplishments
? 2009 Operating Results ^ Activities & Accomplishments ? 2010 Business Plan
Slide 10: POSCO Key Activities
POSCO Key Activities ? Overcome crisis through contingency plan management ? Synchronize processes & shorten business planning cycle (Qtr. ^ Month) - Strengthened cooperation throughout value chain : RM · Production · Sales · Finance ? Achieve historic-high cost savings - '09 Result : 1,359.5 billio
Slide 11: Invest in domestic capacity & high-end product
? Invest in domestic capacity & high-end product ? Expand domestic production capacity - G) #4BF revamping (Feb.18th ~ Jul.21st) & related facilities rationalization · Increased production (3.1 ^ 4.2Mt) with expanded capacity (3,800 ^ 5,500m3) · #1 CCL, #1 HR, #2 CR - P) New Steelmaking Plant ration
Slide 12: Expand overseas investment for growth
? Expand overseas investment for growth ? Overseas integrated steel mill projects - India central government approved on forest diversion of plant site in Orissa (2,900acre) - MOA Signed to build integrated steel mill in Indonesia : 1st stage of 3Mt/yr (~'13), total 6Mt ? Downstream facility in Asia
Slide 13: Promote green business & set foundation for new growth
? Promote green business & set foundation for new growth ? Foundation of 'Green Growth Committee' & establish master plan - Invest 7 trillion KRW in green growth business until '18 · Develop low-carbon steelmaking technology & renewable energy business ? Environment-friendly green growth business -
Slide 14: 2009 Investment by Category
Category Investment Major Activities Capacity expansion, high-end product competency 2,518 P) New steelmaking, G) Plate plant, G) #5 Sinter / #5 Cokes plant, etc. Maintenance, cost savings, reduce environment impact 1,674 G) #4 BF revamping, G) #1 HR facility renovation, etc. Overseas steel 280 Indi
Slide 15: Share Price / Dividend
Share Price / Dividend ? POSCO outperform KOSPI & peers, recoup market cap. of 50tn '08.12/E '09.12/E YoY POSCO (Won) 380,000 618,000 +62.6% KOSPI 1,124.47 1,682.77 +49.7% A-Mittal ($) 24.59 45.75 +86.1% U S S ($) 37.20 55.12 +48.2% N S C (?) 290 375 +29.3% ? 8,000 KRW/share (includes interim divide
Slide 16: Subsidiaries' Key Activities
Subsidiaries' Key Activities ? POSCO SS expanded sales of import-substitutable carbon-alloy steel - Order increased by 150Kt : wire-rod 115, beam 10, billet 25 ? POSCO C&C developed high-function · high VA products (12 in '09) - Commercialized AL-STS409L used for auto exhausts (POSCO Power) (POSDATA
Slide 17: 2010 Business Plan
? 2009 Operating Results ? Activities & Accomplishments ^ 2010 Business Plan
Slide 18: Global Steel Market Trend & Outlook
Global Steel Market Trend & Outlook ? Production & price recover in expectation of economy improvement ? Demand to grow 10% due to restocking & market recovery < Steel Demand Forecast > * Worldsteel (Oct.'09), WSD (Dec.'09) 1.10 1.21 '08 '09(F) 1.21 '10(F) - -8.6% 9.2% - -1.4% 12.0% 1.27 15.4% 1.23
Slide 19: China Steel Market Outlook
China Steel Market Outlook ? Demand to grow again in '10 due to favorable market condition ? Consumption to rise above 5% led by 9% economic growth & firm demand ? Expect price rise due to fast demand recovery after '10.2Q * Mysteel (Dec.'09) < China Spot Price & Inventory Trend > ? Price in recover
Slide 20: Domestic Steel Market Outlook
Domestic Steel Market Outlook ? Steel consumption to grow 13% due to demand industry recovery < Domestic Consuming Industry Outlook > Auto Ship- building Construction ? Improve as economy recover & new model introduced - Auto production (in thousand unit) : 3,472 ('09) ^ 3,683 ('10) ? Decrease in sh
Slide 21: Raw Material Market Outlook
Raw Material Market Outlook ? Sharp rise in Chinese import & growing consumption of major mills - Chinese import (MT) : 6.8 ('08) ^ 33 ('09F) - Spot price (U$/t) : 115 (Feb.'09) ^ 170~180 (Jan.'10) ? Expect delay in price settlement as suppliers demand new pricing system (Yr. ^ Qtr.) 215 204 224 215
Slide 22: Stainless Steel Market Outlook
Stainless Steel Market Outlook ? Expect demand recovery & steady Nickel price in '10.1H ? Price rising since '09.2Q (U$11K^16K^17K/t) - Driven by economic recovery & restocking in China ? '10 price to remain at U$17K ~ 20K/t - Accompanied by strong commodity mkt. & STS demand - High level of invento
Slide 23: 2010 Business Plan: Leap to POSCO 3.0
2010 Business Plan ? Leap to 'POSCO 3.0' Era focusing on core business, global growth, family management ? Strengthen Mkt. dominance ? Maintain cost competency ? Enhance tech. leadership ? Increase raw material self-sufficiency level ? Secure global growth base ? Group synergy growth & new business
Slide 24: 2010 Business Plan: Cost Savings Results & Plan
2010 Business Plan < Cost Savings Results & Plan > Raw Material 905.9 Energy 78.8 Outsourcing, etc. 94.5 2006 2007 2008 2010(Target) 1,112.1 828.7 738.2 1,150.0 (in billion won) Maintenance 70.8 2009 1,359.5 ? 32Mt sales vol. under full production & reinforced market dominance ? 34Mt crude steel pro
Slide 25: 2010 Business Plan: Raw Material and R&D Investment
2010 Business Plan ? Continue raw material investment (Self-sufficiency 18% ^ 30%) ? Invest in early stage mine development & J/V with mid-size supplier - Participate in new prospecting mine (Australia, Brazil, etc.) & enter emerging resource countries ? Capacity expansion investment in existing min
Slide 26: 2010 Business Plan: Group Growth & New Business
2010 Business Plan ? Mutual growth within POSCO group & expand new business ? Establish POSCO family mgmt. system & strengthen mutual cooperation - Foster strategic businesses : E&C, resource development, energy, ICT business, etc. - Strengthen mutual cooperation through family integrated informatio
Slide 27: Subsidiaries' 2010 Plans
? Enhance competitiveness & penetrate strategic overseas market - Order amount : 9.6tn ('09) ^ 11.5 ('10 target) - Overseas steel plant: Venezuela STS 2tn, India VIRAJ STS 500bn KRW ? Earlier completion of power plant construction - Incheon LNG (Nov.'11 ^ Jun.'11) & by-product recycle power plant (N
Slide 28: 2010 Business Plan (Financials)
2010 Business Plan (Financials) 2009 2010 • Crude Steel Production - Consolidated 29.5 31.1 34.4 36.1 • Finished Product Sales 28.4 32.4 • Sales Revenue - Consolidated 27.0 37.0 29.5 43.0 • Investment 4.9 9.3* (in million ton, trillion KRW) * Investment: CAPEX (5.0tn), Overseas Steel (1.0tn), Energy
Slide 29: 2010 CEO Forum, January 14th 2010
2010 CEO Forum January 14th 2010