LG Chem Ltd. · KRX:051910
LG Chem — Non-Deal Roadshow (October 2003)
30 slides from LG Chem's roadshow presentation, October 2003
Slide 1: LG Chem, Ltd. The Impetus of Innovation
LG Chem, Ltd. The Impetus of Innovation October 2003
Slide 2: Table of Contents
Table of Contents Overview 1 Financial Highlights 6 Business Operations 8 LG Chem’s Vision 14 Appendix 15
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 & Electronic Materials 18% Performance 8% Performance Industrial Polymers Industrial Polymers 25% Materials Materials 22% 35% 38% Petrochemicals Petrochemicals 29% 25% 2002 Sales KRW 5,115 bn 2005(E) Sales KRW 7,485 bn Petroc
Slide 5: Market Position
Market Position Overview Global Position Market Presence (Unit : KMT) ¾ Industrial Materials • Dominant No.1 Market Share in the domestic market 1,500 - Decorative/Housing Materials (50%) - Automotive Parts (37%) 1,100 1,000 • Globally competitive products (Global M/S) 800 PVC - High-gloss Sheet (67
Slide 6: Target Market
Target Market Overview Sales Contribution by Market (’02) Direct Investments in China Products Ownership ’03 Sales(E) Capacity(pa) (USD mn) 5,115 billion PVC 1) 75% 340 KMT 154 ABS 2) 75% 300 KMT 217 Export 51% China 43% 25 High-gloss sheet 90.4% 7.2 mn sqm PVC Window 100% 15 KMT 8.8 22% Asia EP Com
Slide 7: China Strategy
China Strategy Overview Business Direction China operations will account for over 50% of total overseas sales and become the basis for globalization of the company in 2005. Business Strategy • Focusing on PVC and ABS that have * (Beijing) high growth opportunity and internal expertise, LG Chem will
Slide 8: Business Performance
Business Performance Financial Highlights Earnings ’02~’03(E) Sales & Operating Profit (KRW billion) ( KRW billion) ’02 ’03 1H ’03 (E) sales O/P Margin Sales 5,115 2,806 5,810 5,810 Domestic 2,920 1,427 3,321 5,115 Export 2,195 1,379 2,489 Operating Profit 503 254 518 9.8% (%) (9.8) (9.1) (8.9) 8.9%
Slide 9: Financial Structure
Financial Structure Financial Highlights (KRW billion) Balance Sheet ’02.12 ’03.1H ’03.12(E) Borrowings Assets 3,846 4,379 4,459 Liabilities 2,389 2,761 2,668 Borrowings(KRW trillion) Net Debt/Equity (%) 3 125 Borrowings 1,292 1,780 1,582 Shareholders’ Equity 1,457 1,618 1,791 100 Paid In Capital 36
Slide 10: Petrochemical Key Products
Petrochemical Key Products Sales Breakdown of Petrochemical Business Key Products (’02) (KRW billion,%) Sales/ Domestic Export Avg.Spot Sales Total (%) *Price(’02) (%) (%) ABS/ PS 32% LDPE 10% PVC 607 9.7 71 29 552 ABS 547 8.8 37 63 860 Others 22% LDPE 147 2.4 42 58 594 PVC/ Plasticizer 36% * CFR HK
Slide 11: Petrochemical Business Strategy
Petrochemical Business Strategy Supply & Demand in China (’05) 5,850 (KMT) 2,120 China is experiencing a chronic shortage Demand of PVC and ABS, and that shortage is Focus on PVC ABS expected to persist even after 2005. China Capacity Expansion Plan in China Balance PVC : 340K MT (’03) 640K MT(’05)
Slide 12: Industrial Materials Steady Business
Industrial Materials Steady Business Market Indicator Operating profit Trend (KRW billion,%) 8.8 6.0 GDP growth 2.8 3.5 rate (%) 206 187 8.2 Remodeling 7.6 152 Market Size 128 9.0 (KRW trillion) 6.3 10.5 8.1 8.1 Housing 666,000 Construction 433,000 Permit (Unit) 550,000 3.2 Automobile CAGR 8.6% Prod
Slide 13: Industrial Materials Business Strength
Industrial Materials Business Strength Domestic Presence Global Strategy •Absolutely Dominant Player •Strength in China Business - #1 Market Share - Marketing & manufacturing (PVC Floorings, Window frames, Automotive subsidiaries for PVC Window frames, Materials, High-gloss Sheet, etc.) PVC Flooring
Slide 14: Information & Electronic Materials Growth Momentum
Information & Electronic Materials Growth Momentum Business Environment Business Result & Forecast [Sales] (KRW billion) .0% R 14 CAG 1,370 660 Lithium Ion 1,050 .4% Battery Market 712 R 74 G (million cell) CA 439 50 217 48 % Battery/ 9.8 215 Printed G R1 46 TFT-LCD market CA Circuit Materials 65% (
Slide 15: Information & Electronic Materials Market Leadership
Information & Electronic Materials Market Leadership Competitiveness • R&D Capability - 100% in-house developed technology • Customer Relationship - Battery: LG Electronics, Motorola, Sony-Ericsson, Siemens, Apple - Polarizer: LG Philips LCD, BOE Hydis, CPT(Taiwan), Hanstar(Taiwan) [Lithium-ion] • H
Slide 16: LG Chem's Vision
LG Chem’s Vision No.1 LG Future Prospects Sales (KRW trillion) 2% R 18. CAG To be a global leader – Exceeding customer expectations 10.0 15.0 through advanced technologies 5.5 and innovative solutions, and ’02 ’05(E) ’08(E) earning the trust of stakeholders * Include Overseas Operating Profit (KRW t
Slide 17: Business Performance (Divisional Breakdown)
Business Performance (Divisional Breakdown) Appendix (KRW billion) Sales Operating Profit ’02 ’03 1H ’03(E) ’02 ’03 1H ’03(E) Petrochemicals 1,664 898 1,841 151 80 168 PVC/Plasticizer 1,129 609 102 57 Acrylate 276 160 31 16 PE 316 165 18 7 Performance Polymers 1,294 737 1,514 108 31 65 ABS/PS 923 53
Slide 18: CAPEX Plan
CAPEX Plan Appendix (KRW billion) ’02 ’03 1H ’03(E) New/Expansion 7.8 0.9 3.0 Maintenance 32.9 11.2 22.3 Petrochemicals Equity Investment - 3.1 3.1 Total 40.7 15.2 28.4 New/Expansion 21.2 14.3 27.5 Performance Maintenance 21.7 8.6 17.1 Polymers Equity Investment 22.4 11.5 11.5 Total 65.3 34.4 56.1 N
Slide 19: Cash Flow
Cash Flow Appendix (KRW billion) 2002 2003 1H 2003(E) CASH OUT 497.8 778.6 964.4 Investment 332.6 483.2 749.3 Working Capital 11.1 109.7 (10.0) Dividend Payout 55.2 110.0 110.0 Development Cost etc. 68.0 20.0 38.3 Others 30.7 55.7 76.8 CASH IN 838.3 290.3 674.2 Net Income 336.8 160.7 337.4 Depreciat
Slide 20: Borrowings
Borrowings Appendix (Unit : KRW billion, %) Balance Dec 31, 2002 June 30, 2003 Dec 31, 2003(E) Total 1,292 1,780 1,582 (%) (100) (100) (100) KRW Currency 1,091 1,585 1,411 (%) (84) (89) (89) C P 0 107 157 C B 1,030 1,170 1,000 Others 61 308 254 Foreign Currency 201 195 171 (%) (16) (11) (11) Syn. Lo
Slide 21: Petrochemical Cycle
Petrochemical Cycle Appendix The overall petrochemical industry already entered a recovery phase given limited supply growth since 2001 while the demand in Asia increased. From 2H of 2003, the industry is likely to see the recovery accelerate. Absorbing the Excess Basic Chemicals and Plastics Capaci
Slide 22: Product price & Raw materials
Product price & Raw materials Appendix Raw materials price trend (Unit:U$/Ton) Product price trend (Unit:U$/Ton) Ethylene ABS Benzene LDPE 1,056 EDC PVC 1,000 910 910 896 581 883 600 463 420 800 406 511 719 650 387 741 625 400 367 383 379 612 392 598 386 353 672 600 612 340 350 543 568 568 272 288 4
Slide 23: Production Capacity by Product
Production Capacity by Product Appendix Petrochemicals & Polymers (unit:KMT) Performance Polymers (unit:KMT) Item Region ’02 ’03 ’05 Item Region ’02 ’03 ’05 Yeosu 560 560 560 Yeosu 410 500 500 Daesan 200 200 300 ABS China 300 300 500 PVC China 240 340 640 Total 710 800 1,000 Total 1,000 1,100 1,500
Slide 24: Korea Capacity Matrix
Korea Capacity Matrix Appendix Korea Capacity Matrix as of January 2003 Propylene(*) Propylene Butadiene Mixed C4 Ethylene Benzene Toluene Company 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 1,762 753 2,787 1,911 2,453 445 3,430 1,416 830 1,
Slide 25: Shareholders Information
Shareholders Information Appendix Shareholders Structure Share Information (KRW) Dec 30, 2002 The end of Aug.2003 Shares Price Price Market cap LG Corp. 34.0% Foreign Investors 28.73% Common 64,425,064 40,600 51,700 3,331 bn Institutional & Individual Investors Preferred 8,661,251 17,800 24,100 209
Slide 26: Dividend Policy
Dividend Policy Appendix Dividend History Dividend Policy 30% 30 - LG Chem determines dividends on the basis of net income Dividend yield to par 25 (Common Stock) and total earnings available for distribution. 20 - For 2002, due to the fact that the company scored its greatest results ever, LG Chem
Slide 27: Hyundai Petrochemical
Hyundai Petrochemical Appendix Earnings ’02~’03(E) Balance Sheet (KRW billion) (KRW billion) ’02 ’03 1H ’03(E) ’02.12 ’03.1H ’03.12(E) Assets 3,031 3,093 3,120 Sales 1,962 1,171 2,325 Liabilities 2,200 1,405 1,338 Domestic 1,012 606 1,213 Export Borrowings 1,966 1,191 1,024 950 565 1,112 Shareholder
Slide 28: Hyundai Petrochemical Operation Plan and Synergy
Hyundai Petrochemical Appendix Operation Plan Synergy of Acquisition Acquisition date : July 1, 2003 • Reinforce a stable business portfolio by vertical Management Structure integration of our core businesses by expanding reliable supply of basic materials such as · LG Chem-Honam Joint Management et
Slide 29: LG holding Company Structure
LG holding Company Structure Appendix *LG *LG Corp Corp As of June 30, 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 Telec
Slide 30: BOD Members
BOD Members Appendix Name Date of Birth Career MA(Chemical Engineering), Hanyang University CEO January, 1947 CEO of LG Dow Polycarbonate No, Ki Ho CEO of LG Petrochemical *President/CEO of LG Chem BA(Business Administration), Korea University Director Cho, Han Yong September, 1949 Vice President of