POSCO Holdings Inc. · KRX:005490
POSCO — FY2016 Earnings Presentation
20 slides from POSCO's earnings presentation, Jan 25, 2017
Slide 1: 2016 Earnings Release
January 25, 2017 2016 Earnings Release Figures 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. Exhibit 99.1
Slide 2: 2016 Operating Performance, Major Business Activities, 2017 Business Plan
2016 Operating Performance Major Business Activities 2017 Business Plan ▶ Figures 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: 2016 Operating Performance: Parent Income
ㅋ` Parent Income Achieved 10.8% OP margin backed by increased WP products and cost-saving efforts 2016 Operating Performance POSCO Earnings Release ｜January 25, 2017 (thousand tons) 727 606 566 Carbon Steel Price (billion KRW) OP Margin 8.0% 8.7% 10.8% Production Sales Income 2014 2015 2016 37,650 3
Slide 4: Parent Income Operating Profit
Parent Income Operating Profit 2.2 2.6 △1.2 Contraction of mill margin* due to market slowdown +0.02 Forex -related +0.2 Decrease of sub-materials cost +0.5 Increasing WP Sales +0.4 Saving Cost +0.5 Improving Profitability +0.4 ’15 ’16 External Causes: △1.0 Internal Efforts: +1.4 Increased WP produc
Slide 5: Consolidated Income
Consolidated Income Revenue Operating Profit Net Profit / ROE 3,214 65,098 2,410 2,844 4.9% 4.1% OP Margin 2014 2015 2016 2015 2016 5.4% 2014 2016 ROE 1.2% △0.2% 53,084 557 △96 1,048 2014 58,192 2015 2.3% Consolidated profit gained on stronger steel division performance despite E&C restructuring (bi
Slide 6: Consolidated Financial Structure
Consolidated Financial Structure Innovated consolidated financial structure by successful business restructuring and strengthening steel competitiveness (trillion KRW) 2014 2015 2016 Total Operating Activities 2.0 6.3 3.4 11.7 (+)EBITDA 6.5 5.6 6.1 18.2 (-)Corporate Tax Working Capital, etc. 4.4 △0.
Slide 7: Major Business Activities
2016 Operating Performance Major Business Activities 2017 Business Plan ▶
Slide 8: Strengthen Steel Competitiveness
Strengthen Steel Competitiveness Expanded WP product sales and continued solution-marketing activities by converging technology and marketing Expanded WP product sales 12,710 15,973 16,859 38.4 52% 47.3 WP Portion 2015 2016 2017(f) [WP Sales Volume/Portion] 2,420 3,900 +61% 4,500 2015 2016 2017(f) [
Slide 9: STS Operating Profit
[STS] Operating profit reached 400 billion KRW by pushing up high-end products sales despite weak market conditions * Include POSCO, ZPSS, 4 CR Mills (Thailand THAINOX, Vietnam P-VST, Turkey Assan TST, China QPSS), 1 Processing Center (Italy ITPC) STS-300 (thousand KRW/ton) POSCO) Recorded highest s
Slide 10: Overseas Steel
* Overseas Steel : Upstream+ Downstream+ Processing center+ Raw materials 2014 2016 107 24 2015 △275 △72 2014 2015 △133 2016 △80 PT Krakatau POSCO ZPSS [Overseas Steel] Operating profit increased as sales volume went up and cost reduction continued while borrowings declined Profit improved as sales
Slide 11: Restructuring Progress
85% completed by restructuring 126 cases (77 subsidiaries, 49 assets) from 149 cases (Target : 95 subsidiaries/54 assets) Restructuring Progress Improved financial structure realizing the effect of 5.8 trillion KRW on an accumulated basis Subsidiaries→ Assets sold → 58 cases completed (39 Subsidiari
Slide 12: Group Company Performance: POSCO Energy, C&C, Daewoo, E&C
POSCO Energy Operating profit decreased as power generation and electricity price dropped POSCO C&C Performance improved due to increased high-end product sales and cost reduction efforts - High-end product sales portion (%): ‘15) 29→'16) 39 Sold inefficient assets, including 50% stake in Seoul offi
Slide 13: 2017 Business Plan
2016 2017 POSCO Revenue (trillion KRW) 24.3 25.6 - Crude steel production (million tons) 37.5 37.0 - Product sales (〃) 35.9 34.6 CAPEX (trillion KRW) 2.0 2.6 Net Debt (〃) △0.1 △1.4 Consolidated Revenue (trillion KRW) 53.1 54.8 CAPEX (〃) 2.5 3.5 Net Debt (〃) 15.1 13.4 2017 Business Plan POSCO Earning
Slide 14: Sustainability Rankings and Enhanced Enterprise Value
Ranked the best steelmaker to respond towards climate change 01 (by Global sustainability institution, CDP) Acquired top scores among 14 steelmakers on 6 agendas, green gas emission, energy management, carbon emission pathways/targets/costs, low carbon technology development, water shortage, climate
Slide 15: Appendix
Appendix 1. Business Environment - Steel Demand and Raw Materials 2. Financial Statements ▶
Slide 16: Business Environment: Domestic Steel Demand
Appendix 1. Business Environment Domestic Steel Demand Demand Outlook Steel Demand and Supply Outlook Shipbuilding Construction Automobile Export to emerging markets slightly increased on demand pick-up despite weak domestic demand, Production went up to 4.3 million As new orders declined from 2014
Slide 17: Global Steel Demand
Global Steel Demand China’s Steel Economy Steel Demand in Major Countries “Steel price will continue to be on a rise backed by contraction of overcapacity in China” “Global demand will moderately grow on favorable demand in EM even with slow demand in China” China : Moderate overall demand reduction
Slide 18: Raw Materials
Raw Materials Iron Ore Coking Coal 4Q 2016 2017(F) (US$/ton) [Iron Ore Price] 2015 1Q 2015 2Q 2015 3Q 2015 4Q 2016 1Q 2016 2Q 2016 3Q 2016 4Q 2017 1Q(f) 58 62 55 46 48 55 58 70 71 4Q 2016 2017(F) “Fine ore annual average price around U$60~70/ton ” As supply from new projects and small and medium siz
Slide 19: Consolidated Income Statement
Consolidated Income Statement 2014 2015 2016 YoY Revenue 65,098 58,192 53,084 △5,108 Gross Profit 7,284 6,534 6,689 155 (Gross Margin) (11.2%) (11.2%) (12.6%) - SG&A 4,070 4,124 3,845 △279 Operating Profit 3,214 2,410 2,844 434 (Operating Margin) (4.9%) (4.1%) (5.4%) - Other Non-Operating Profit △71
Slide 20: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 2014 2015 2016 YoY Current Assets 32,627 29,181 29,304 123 Cash Balance* 5,197 8,686 7,623 △1,063 Account Receivables 11,786 9,596 9,787 191 Inventories 10,471 8,225 9,052 827 Non-Current Assets 52,625 51,228 50,459 △769 Other Long-term Financial Assets**