POSCO Holdings Inc. · KRX:005490
POSCO — FY2006 Earnings Presentation
21 slides from POSCO's earnings presentation, Jan 11, 2007
Slide 1: 2007 CEO Forum
2007 CEO FORUM 2007.1.11
Slide 2: Agenda
Agenda 2006 Operating Performance 2007 Business Plan 2 1 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: 2006 Operating Performance: Production & Sales
Production & Sales (in million tons) Consolidated Portion of Sales Volume Finished product sales Strategic product sales Crude steel production POSCO (non-consolidated) POSCO ? Consolidated production 31.2mt, from POSCO, Changwon, Zhangjiagang ? Despite Zhangjiagang STS, sales down due to major main
Slide 4: Income Summary
Income Summary * Consolidated results for 2006 are subject to change with adjustments in internal transactions (billion KRW) Consolidated Revenue Operating income Net income POSCO * POSCO net income : excludes equity method gains ? Solid results from increased high VA product sales and cost reductio
Slide 5: Summarized Income Statement (POSCO)
Summarized Income Statement (POSCO) 2004 2005 2006 2004 2005 2006 YoY(%) Revenue Revenue 19,792 21,695 20,043 -7.6 Gross income (Gross margin) Gross income (Gross margin) 6,085 (30.7%) 6,992 (32.2%) 5,010 (25.0%) -28.3 S G & A S G & A 1,031 1,080 1,118 3.5 Operating income (Operating margin) Operati
Slide 6: Financial Structure
Financial Structure Assets increased due to profit generated and new investments ? Despite increased debt for share buyback and new investments, debt ratio improved (billion KRW) 500 5600 6300 6800 0 0 0 500 1800 1700 1900 0 0 0 500 4000 5100 5700 0 0 0 2004 2005 2006 Consolidated 2004 2005 2006 200
Slide 7: Summarized Balance Sheets (POSCO)
Summarized Balanced Sheets (POSCO) (billion KRW) 2004 2005 2006 2004 2005 2006 YoY(%) Current assets Current assets 7,742 8,399 7, 871 -6.3 Cash equivalent assets* Notes receivable Inventory 3,564 1,985 2,109 3,351 2,110 2,719 3,213 1,804 2,735 -4.1 - -14.5 0.6 Long-term assets Long-term assets 13,6
Slide 8: Financial Ratio
Financial Ratio Operating Income EBITDA Return on Equity Liabilities-to-Equity Ratio 2006 Operating Performance 1,145 1,325 1,469 1,511 '06.1/4 16.9 20.1 (KRW trillion,%) 2/4 3/4 (%) (KRW trillion,%) (%) 20.1 4/4 '06.1/4 24.6 28.3 2/4 3/4 27.7 4/4 '06.1/4 19.6 21.2 2/4 3/4 22.0 4/4 '06.1/4 13.9 14.3
Slide 9: Key Business Activities 2006: Global growth investment
? Increased global growth investment ? Completion of integrated stainless steel mill in Zhangjiagang, China ('06.7) ? Completed operational capacity: Pohang 2.0mn ton, Zhangjiagang 800K ton ? Equity purchase to secure stainless CR manufacturing customers: Taihan (19.9%) & Thainox (15%) ? Progress on
Slide 10: Key Business Activities 2006
? Revamping Pohang No.3 BF ('06.5): production increase 450K ton/yr ? Upgrade Pohang No.2 HR & add'n continuous rolling ('06.5): capacity increase 400K ton/yr ? Completion of Gwangyang No.6 CGL for auto-steel ('06.6): capacity 400K ton/yr ? Upgrade Electrical Steel Mill ('06.6): Capacity 1mn ton/yr
Slide 11: 2006 Investment by Category
Category Investment Major projects Increase strategic product 0.9 Upgrade Pohang No.2 HR & Elec. Steel Mill Increase production capacity 1.2 Finex, re-vamping of Pohang No. 3 BF Maintenance, cost cut, env't 1.0 Gwangyang sinter gas purification facility Overseas steel, alliance, raw mat'l 0.4 Vietna
Slide 12: Share price
Share price ? Large increase in share price over KOSPI '05.12/E '06.3/E '06.6/E '06.9/E '06.12/E KOSPI POSCO KRW 202,000 1,379.4 KRW 309,000 (+53%) 1,434.5 (+4%) < Share price movement over 12 months > 2004 2005 2006 2004 2005 2006 < PER > 2004 2005 2006 < EPS > < Market Cap. > 4.0 4.0 7.6 50,438 47
Slide 13: Enhancing Shareholder Value
Enhancing Shareholder Value ? Buyback/cancel for 6 consecutive years ? Total 4% share buyback in '06 ^ No. treasury shares: 9,594K (as of Dec.06) ? '06 dividend plan (tentative) ? KRW 8,000/share (incl. interim \2,000) ? Dividend yield: 2.6% (over closing price '06) ? Dividend payout ratio: 19.4% 20
Slide 14: Agenda
Agenda 2 1 2006 Operating Performance 2007 Business Plan
Slide 15: Business Environment
Business Environment 2007 Business Plan ? Changes in Steel Industry Paradigm ? M&A continue: Premium steel mills continue strategic alliance/M&A ? Competition for raw mat'l: Increase in iron ore self-sufficiency and joint-development of mines ? Global steel growth continue: Developed countries slow
Slide 16: Global Steel Market Trend
Global Steel Market Trend ? Slow in 1H07, but to recover in 2H07 as supply & demand improve ? US/EU: Weak with slow economy & rising import, but production discipline to take effect in 2Q ? China: Despite rising production, stable due to low inventory & mills' effort to stabilize market (mm tons) '0
Slide 17: 2007 Business Activities: Global Growth Investment
? Aggressively pursue Global Growth Investment ? India Project: acquisition of mining rights and landsite ? Approval of prospecting license for mine in Khandadhar area by central gov't('07.3) ? Complete land purchase('07.9), begin port and site preparation('07.10) ? Complete construction of 1st Phas
Slide 18: 2007 Business Activities: High value-added, low cost structure
? Establish high value-added, low cost production structure ? Rationalization of Gwangyang No.3 BF and downstream facilities ? Revamp Gwangyang No.3 BF: capacity increase 670K ton/yr ('07.10~12) ? Rationalize No.2 Continuous Casting ('07.8~12), No.3 HR ('07.10~11), No.4 CR ('07.10~11) ? Strengthen s
Slide 19: 2007 Investments
(KRW trillion) ? Posco's domestic steel investment (KRW 2.9tn) - Strategic Product 1.2tn, Capacity expansion 0.7tn Maintenance 0.7tn, Cost savings 0.2tn Environment 0.1tn ???? ???? ??? ??? ???? 29111 17761 12000 594 Internal facilities 2.9tn (49.2%) Energy&other 0.1tn Overseas steel & raw mat'l 1.7t
Slide 20: 2007 Business Plan Targets
The above data represents Company's internal objectives, and should not be used as a basis for investment decisions 2007 Business Plan in million tons, trillion KRW 2006 2006 2007 2007 in million tons, trillion KRW Consolidated POSCO Consolidated POSCO Crude Steel Prod. 31.2 30.1 32.4 30.6 Sales Vol
Slide 21: 2007 CEO Forum
2007 CEO FORUM 2007.1.11