LG Chem Ltd. · KRX:051910
LG Chem — Non-Deal Roadshow (June 2004)
32 slides from LG Chem's roadshow presentation, June 2004
Slide 1: LG Chem - June 2004
_ Future for you June 2004 @ LG Chem ES te
Slide 2: Table of Contents
Table of Contents Overview 1 Financial Highlights 7 Business Operations 10 LG Chem’s Vision 18 Appendix 19
Slide 3: History of LG Chem
History of LG Chem Overview Jan 1947 Established as Lucky Chemical Industrial Corporation Jan 1961 Launched vinyl flooring production Sep 1976 Commissioned Yeosu PVC resin plant Nov 1978 Commissioned Yeosu ABS resin plant Jan 1983 Commissioned Cheongju window profile plant Oct 1994 Commissioned Daej
Slide 4: Business Portfolio
Business Portfolio Overview Information & Electronic Materials Information Information Information & && Electronic Electronic Electronic Materials Materials Materials 12% 37% 34% 34% Chemicals & Industrial Industrial Polymers Chemicals Materials Chemicals Chemicals && & Materials 55% 33% Polymers 28
Slide 5: Market Position
Market Position Overview Chemicals & Polymers Industrial Materials (Unit : KMT) • Dominant No.1 Market Share in the domestic market - Building & Decorative Materials (50%) 1,800 - Automotive Parts (30%) 1,340 • Globally competitive products (Global M/S) 1,100 - High-gloss Sheet (66%) 800 PVC - Adver
Slide 6: Target Market
Target Market Overview Sales Contribution by Market (’03) Overseas Business by Region • China - Primarily focused on Chemicals & Polymers products 5,673 billion through exports as well as local production - Expand capacity of battery & polarizer businesses 45% China Export 34% • US & Europe Asia - E
Slide 7: China Operations and Vision
China Operations and Vision Overview Direct Investments in China Vision Products Ownership Capacity(pa) ’03 Sales (U$ mn) Top 5 Chemical Company in China by ’08 PVC 1) 75% 340 KMT 206 ☞ Sales : U$ 4 bil, OP margin : 8.7% by 2008 ABS 2) 75% 300 KMT 297 EP Compounding 100% 20 KMT 5.1 Business Prospect
Slide 8: China Strategy & Business Direction
China Strategy & Business Direction Overview Chemicals & Polymers Industrial Materials • Secure a sustainable competitiveness • Develop products with high competitiveness in China - Cost leadership by vertical integration - PVC Window frames and High-gloss sheets - Market leadership - Differentiatin
Slide 9: Financial Highlights - Earnings
Financial Highlights Earnings Non-consolidated Earnings (KRW billion) Sales & Operating Profit ( KRW billion) Ach Sales ’03 ’04(E) ’04 1Q (’04 1Q) O/P Margin 6,269 Sales 5,673 6,269 1,609 26% 5,673 Domestic 3,745 4,138 1,062 26% Export 1,928 2,131 547 26% 9.4% Operating Profit 479 592 169 29% (%) (8
Slide 10: Financial Highlights - Balance Sheet
Financial Highlights B/S (KRW billion) Balance Sheet ’03.12 ’04.1Q ’04.12(E) Borrowings Assets 4,761.7 5,069.8 5,376.9 Borrowings(KRW trillion) Net Debt/Equity (%) Liabilities 2,947.1 3,239.9 3,187.2 3 125 Borrowings 1,706.0 2, 018.0 1,677.5 Shareholders’ Equity 1,814.6 1, 829.9 2,189.7 100 94.0 Pai
Slide 11: Financial Highlights - Consolidated F/S
Financial Highlights Earnings Consolidated F/S (KRW billion) Subsidiaries I/S (KRW billion) LG PC LG Dagu LG Yongxing Hyundai PC* ’02 ’03 ’04(E) ’03 ’04(E) ’03 ’04(E) ’03 ’04(E) ’03 ’04(E) Asset 4,618 5,835 6,800 Sales 1,253 1,210 246 266 354 331 2,381 2,110 Liability 2,736 3,618 4,200 Borrowings 1,
Slide 12: Chemicals & Polymers - Business Overview
Chemicals & Polymers Chemicals & Polymers Business Overview Business Outlook Earnings ’03 Review (KRW billion) • Sluggish domestic economy and strong raw materials 3,261 3,209 prices worsened ABS/PS margin • O/P margin improved throughout 3Q & 4Q due to PVC/ 36 33 the gradual recovery of demand Plas
Slide 13: Chemicals & Polymers - Strategy
Chemicals & Polymers Chemicals & Polymers Strategy Business Outlook Market Portfolio Domestic Market Share 942 285 388 165 (Unit : kMT) PVC 65% 20% 15% ABS 30% 50% 20% LG LDPE* 60% 25% 15% 75% 54% 50% Acrylate 60% 20% 20% 23% PVC ABS LDPE Acrylate Domestic China Others • 2003, Quantity Based • 2003,
Slide 14: Chemicals & Polymers - Business Strategy
Chemicals & Polymers Chemicals & Polymers Strategy Business Strategy Vertical Integration Specialty Products Self Sufficiency of Key Raw Materials Specialty Products Proportion 30% 35% 106% 101% 82% 100% 28% 11% 50% 18% 33% 8% 6% 9% '04 '08 SM* VCM EDC '03 '04 '05 '06 PVC ABS * Hyundai PC Included S
Slide 15: Industrial Materials - Business Overview
Industrial Materials Business Overview Earnings (KRW billion) ’03 Review • Delay in the domestic economic recovery and the overall 2,110 depressed consumer sentiment worsened profitability 1,960 22 • Sluggish domestic construction industry dampened Building& Decorative Materials Living 19 22 • Diffe
Slide 16: Industrial Materials - Strategy
Industrial Materials Strategy Business Strategy World-class Products No. 1 Market Share in the domestic market High-gloss Sheet - Maintain No. 1 position by introducing high value-added, high functional and environment-friendly products Foster World-class products - Shift product mix toward glob
Slide 17: I & E Materials - Business Overview
I & E Materials Business Overview Earnings (KRW billion) ’03 Review • Capacity expansion 1,280 - Battery : 4.3 (’03 1Q) → 18.0 mn cell/month (‘03 Dec) - Polarizer: 4.0 (’03 1Q) → 9.3 mn㎡/year (‘03 Dec) 699 • Strong end market demand 52 - Rapid shift to high-end handsets and growth of Notebook PC Bat
Slide 18: I & E Materials - Batteries
I & E Materials Batteries Battery Business Strategic Focus 20% (3rd) • Product Differentiation 12% - Develop high-energy density products by strengthening R&D (4th) - Secure quality differentiation 850 7% (5th) • Expanding Customer Base Market 600 Share - Predominate the 1st supplier’s position with
Slide 19: I & E Materials - Optical Materials
I & E Materials Optical Materials Optical Materials Business Strategic Focus 29% (2nd) • Leading Edge Products 21% - Introduce highly durable, innovative products by strengthening R&D Market (2nd) Share - Become the leader in the LCD TV market (Polarizers) 17% (2nd) 737 137 • Capacity Expansion Sale
Slide 20: LG Chem's Vision
LG Chem’s Vision 「 No.1 LG」 Future Prospects Sales (KRW trillion) % R 22 CAG To be a global leader – Exceeding customer expectations 15.5 through advanced technologies 6.9 7.9 and innovative solutions, and ’03 ’04(E) ’08(E) earning the trust of stakeholders * Consolidated sales Operating Profit (KRW
Slide 21: Business Performance (Divisional)
Business Performance (Divisional) Appendix ( KRW billion) Sales Operating Profit ’03 1Q ’03 ’04 1Q ’04 (E) ’03 1Q ’03 ’04 1Q ’04 (E) Chemicals & Polymers 808.0 3,261.3 936.6 3,209.1 85.5 228.1 110.1 265.3 PVC & Plasticizers 300.3 1,220.1 347.3 42.0 105.4 53.3 Acrylates 81.2 321.0 99.1 8.6 43.9 22.8
Slide 22: CAPEX Plan
CAPEX Plan Appendix ( KRW billion) ’03 Result ’04 Plan ’04 1Q Result New/Expansion 43.7 33.5 4.5 Chemicals & Maintenance 51.4 65.5 7.2 Equity Investment 11.5 32.0 - Polymers Total 106.6 131.0 11.7 New/Expansion 9.4 14.5 0.9 Industrial Maintenance 39.0 53.0 8.5 Materials Equity Investment 7.5 28.5 5.
Slide 23: Cash Flow
Cash Flow Appendix ( KRW billion) ’03 ’04 1Q ’04(E) CASH OUT 993.3 554.7 980.4 Investment 841.4 117.6 621.0 Working Capital △ 78.7 236.1 40.0 Dividend Payout 110.0 128.1 128.1 Others 120.6 72.9 191.3 CASH IN 578.9 242.7 1,008.9 Net Income 362.1 152.8 485.1 Depreciation 256.5 77.2 352.0 Accrued Sever
Slide 24: Borrowings
Borrowings Appendix ( KRW billion, %) Balance Dec.31, 2004(E) Dec. 31, 2003 Mar. 31, 2004 Change Total 1,706.0 2,018.0 1,677.5 312.0 (%) (100) (100) (100) KRW Currency 1,421.0 1,709.3 1,450.7 288.3 (%) (83) (85) (86) C P 65.0 255.5 190.5 98.1 C B 1,100.0 1,200.0 100.0 1,100.0 Others 256.0 253.8 △2.2
Slide 25: Petrochemical Cycle
Petrochemical Cycle Appendix The petrochemical business expects continued growth until 2005 or 2006, assuming continued tight supply; however thereafter, new or expanded production capacities in the Middle East would cause overall oversupply. Source : CMAI (Chemical Market Associates, Inc.) 23/30
Slide 26: Product price & Raw materials
Product price & Raw materials Appendix Vinyl Vinyl Price Price Trend Trend (Unit:U$/MT) Styrenics Styrenics Price Price Trend Trend (Unit:U$/MT) 1,056 1,084 1,100 841 860 950 948 750 910 910 896 692 740 880 672 850 568 607 793 746 568 590 707 531 565 676 514 655 600 463 488 598 548 447 400 511 499 3
Slide 27: Production Capacity by Product
Production Capacity by Product Appendix Petrochemicals & Polymers (unit:KMT) Performance Polymers (unit:KMT) Item Region ’03 ’04 ’08 Item Region ’03 ’04 ’08 Yeosu 560 560 620 Yeosu 500 560 640 Daesan 200 200 230 China 300 320 620 PVC ABS China 340 350 950 India 0 0 80 Total 1,100 1,110 1,800 Total 8
Slide 28: Korea Capacity Matrix
Korea Capacity Matrix Appendix Korea Capacity Matrix as of March 2004 Propylene(*) Propylene Butadiene Mixed C4 Ethylene Benzene Company Toluene LLDPE Xylene HDPE LDPE VCM SBR ABS EDC PVC EPS SM OX EG PA PX PP PS ('000 mtpa ) Total 5,700 3,305 435 1,762 770 3,167 1,911 2,533 445 3,830 1,416 830 1,26
Slide 29: Shareholders Information
Shareholders Information Appendix Shareholders Structure Share Information (KRW) Dec 31, 2003 May 25, 2004 Shares Price Price Market cap LG Corp. 34% Foreign Investors 36% Common 64,425,064 55,000 38,800 2,499 bn Institutional & Individual Investors Preferred 8,661,251 24,500 20,600 178 bn 30% Total
Slide 30: Dividend Policy
Dividend Policy Appendix Dividend History Dividend Policy 35 35% 30% - LG Chem determines dividends on the basis of net income 30 and total earnings available for distribution. Dividend payout ratio at par 25 (Common Stock) - For 2003, LG Chem granted a dividend of 35% of the face 20 value (KRW 5,00
Slide 31: LG Holding Company Structure
LG holding Company Structure Appendix *LG *LG Corp Corp As of December 31, 2003 *KOSPI & KOSDAQ Listed Companies *LG *LG LG LG *LG *LG *LG *LG *LG *LG *LG *LG *LG *LG LG LG LG LG LG LG Household CALTEX Household CALTEX *DACOM *DACOM Industrial Industrial Home Home Chem Chem Electronics Electronics T
Slide 32: BOD Members
BOD Members Appendix Name Date of Birth Career Remark MA(Chemical Engineering), Hanyang University CEO No, Ki-Ho January, 1947 CEO of LG Petrochemical Re-elected *President/CEO of LG Chem BA(Business Administration), Seoul National University Director Kang, Yu-Sig November, 1948 Vice Chairman of LG