Investor Presentation
Jan 2 0 1 2
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Company overview
Total number of shares: 52,066,718 (Common Stock)
Jangjin Kim, CEO & President
Head of Offshore at Sungjin[2009~]
Managin directorof DSME
Hosub Kim, President
Head of sales marketing[2011~]
Vice President of Posco E&C
Name Sungjin Geotec Co., Ltd.
CEO Jangjin Kim
Date of incorporation June 1989
Listing KOSPI on Nov 29, 2007 (051310 KS)
Number of employees 600 (As of Dec 2010)
Business Manufacturing of heavy industry system
components for industrial/petrochemical
plants, power generation,Module&Skid,
and shipbuilding & marine engineering
General Shareholding
Key management Financial overview (KRW billion)
Yongho Sohn, CFO & Vice President
Executive vice President of
POSCO Specialty Steel
2007 2008 2009 2010
Revenue 361.7 520.1 380,1 370.6
Gross profit 44.4 94.9 -11.3 12.2
EBITDA 39.9 87.2 -9.6 1.8
EBITDA margin 11.00% 16.80% - 0.5%
EBIT 29.6 74.8 -26.3 -12.0
EBIT margin 8.20% 14.40% - -
Net income 10.4 -191 -6.4 -11.8
Net income margin 2.90% - - -
Total assets 382.6 682.1 588.9 586.3
Total liabilities 222 672.4 554.5 434.6
Total shareholders’
equity 160.6 9.7 34.4 151.7
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shareholder
breakdown rate(%) Note
POSCO 12,345,110 23.7%
POSCO E&C 4,848,400 9.3%
J.D.Chun et al 10,049,875 19.3%
KDB 6,979,927 13.4%
Samsung En 5,206,671 10.0%
Other 12,636,735 24.3%
Total no of
shares 52,066,718 100.00%
Shareholder breakdown
2012.01.31
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POSCO Family
Creating Another Success Story POSCO
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Business overview: Leading energy & industrial plant
facility manufacturer
Industrial Plant
Big tower
Column
Reactor
Tower
Module & Marine
engineering
Module
FPSO module
Offshore oil & gas plant
Stern and stem blocks
Pontoon module
Power/Desalination
HRSG1
Manifold
Evaporator
Oil & Gas/Petrochemical Other
Heat exchanger
Spherical tank
Pressure vessel
Scrubber
1 Heat Recovery Steam Generator
2010 sales of
KRW374.4bn
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Business overview
Industrial Plant
Quality based service in providing larger and heavier industrial/petrochemical plant modules
Recognition by global customers including oil majors, engineering firms and EPC1 contractors on product
quality & industry leading technology
Strong growth driven by positive outlook of its downstream businesses and flexibility to shift product mix
Completion of major capex & timely R&D investment to enhance both production quality and capacity
Universal facility to produce a full range of products for diverse industrial plants, and capacity to manufacture up
to 5,000 ton towers
Others
Heat
Exchanger
Pressure
Vessel
Column
Reactor
Scrubber
Spherical
Tank
Tower
Big Tower
1
1 Engineering, Procurement and Construction
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Business overview
Module & Marine Engineering - 1
Specialized in technology-driven oil sand plant module(KOSP)
Annual production capacity: 225,000 ton
Expanding semi-rig pontoon & column production
Entry into floater components (i.e., FPSO1 topside module)
Plan to produce turret and deep sea facilities
2
1 Floating, Production, Storage and Offloading
SEMI-RIG
Pontoon
COLUMN
Pontoon/
COLUMN
Jack-up Rig
Onshore
Module
FPSO
Module
Turret
deep sea facilities
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K O S P ( K e a r l O i l S a n d s P r o j e c t )
Fabrication
1st phase 1st~5th phase Notes
Project size(barrel per day) 100,000 500,000
Every other year
construction of
plants Volume(‘000 tonnes) 20 100
Contract price 250 1,250
Project period Oct 9 – Jul 11 By 2020
Business overview
Module & Marine Engineering - 2 2
Load out Site Installation Transportation
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Business overview
Power generation/Desalination
HRSG
Transmission
tower
Evaporator
Desalination & power plants
Equipped with core technology to establish stable production capabilities
Key supplier to all three major HRSG engineering companies, and increasing HRSG market share
One of 2 MED1-type evaporator suppliers to SIDEM, a specialist MED arm of Veolia Water Solutions & Technologies
Increasing desalination facility market share by producing MED-type evaporators
Bundling opportunities with industrial/petrochemical plant orders
3
1 Multi Effect Distillation
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Reactor Structure Assembly (RSA) Operational status of Research Reactors*
The number of Research Reactors for the operation period
Reactor structure, Beryllium Reflector, CRDM, SSDM, Graphite
Reflector, Beam port assembly, Thermal Column, etc..
-Project name : JRTR -Site : Jordan -Client : Jordan Atomic Energy Commission
-Purchase date : February 2011 -Thermal power : 5MW -Description
JCNR RSA
Business overview
Power generation/ Research Reactor 3
Operation Periods
Operational status of Research Reactors
N
U
M
B
E
R
Status Developed Countries Developing Countries
Cancelled 1 4
Operational 148 91
Shut down 183 21
Decommissioned 194 16
Temporary shutdown 8 5
Planned 1 1
Under construction 2 1
Unverified information 0 1
Total 537 140
*Source: IAEA
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1-1. Steel material for energy field to increase for SGT’s diversification of energy business
1-2. Improving the SGT’s competitive power of desalination plant business through establishing a strategic
alliance with POSCO for Duplex
1-3. Improving the competitive power of casting facilities & heavy thickness Plate through establishing a strategic
alliance with POSCO and POSCO SS
1-4. Enhancing the delivery date and sales power through supplying HRSG’s Tube capa by POSCO
1-5. Securing the stable finance & expanding sales through the support from POSCO
SGT
strategy/finance
support
High value-
added steel
market
development
Sales power
reinforcement
by affiliates
cooperation
EPC business
expansion with
affiliates
New energy
business
cooperation
2-1. Securing the steels with bulk purchasing for oil sand plant to meet the requirements of clients (e.g. Major oil
companies)
2-2. Expanding the demand base through the conjunction development of high value-added materials for Energy
plant
2-3. New demand creation by producing shape steel for marine & offshore plant
2-4. Understanding the oversea plant market trend & the order-receiving activities of EPC companies through SGT
to cope actively with steel demand
2-5. Developing intercontinental transport pipe market through the conjunction development of UOE* pipe
3-1. Expanding to supply the raw material to SGT for ‘Iron ore’/’Power’/’Petrochemical’ plant
3-2. Increasing sales and building up the experiences through sharing client network and oversea sales agents
3-3. Sharing the SGT’s fabrication (Infra) & harbor facilities
3-4. Cross-selling of main product between POSCO Plantec & SGT
4-1. Obtain orders of small-mid sized oil refining & petrochemical plant (oil & gas, refining & petrochemical, oil sand)
under USD 500 million with affiliates
4-2. To be pushed forward the Nuclear plant business with affiliates
4-3. Developing the desalination business model such as package deal type combined with financing and O&M
4-4. To be pushed forward the Power plant of package deal type combined with overseas IPP business and group EPC
business
4-5. To be pushed forward the iron ore processing plants business by using the abilities of Group EPC & SGT’s facilities
with affiliates
5-1. To be pushed forward the wind power business with the affiliates after the value chain completion
5-2. To be pushed forward the generation of electric power from tidal currents R&D & business with affiliates
Business
growth
(‘10~12)
Dealing with
affiliates for
New market
development
(‘10~18)
New business
(‘15~’18)
Note: *U-ing, O-ing, Expanding
Business overview S y n e r g i e s w i t h P O S C O 4
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Strategically located near major ports, Sungjin is the
only player who can supply large-size products
Factory 1
Factory 2
Factory 3
Factory 4
57,638m2
Owned
Within 5km radius of Ulsan and
Onsan ports
178,282m2
102,570m2 owned and 75,712m2
leased
Equipped with own pier
104,431m2
Owned
Within 2km of Onsan Port
102,313m2
Leased
Equipped with own pier
64,091m2
Leased
To be equipped with own pier
Seoul
Ulsan F1
F3 F2
F4 Onsan
Port Ulsan
port
F5
Within 5km radius
Factory Area/ownership/port
Factory 5
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Investment highlights
Continued strong growth in its downstream industries
1
Operational flexibility across different
industries and products 2
Superior production facility and advanced
core technology 3
Completion of capacity expansion and leading technology
4
Stringent quality control and recognition by global customers
5
Improving profitability with focus
on margin improvement 6
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Plant Power/Desalination Moudle & Marine
Flexibility in capacity allocation across different
product groups
SungJin Geotec’s flexible production process allows for
dynamic product mix change to meet market demands
6 5 4 3 1 2
Sales mix trend (%) Key specifications of factories
1 Includes headquarter employees
Factory 1 Factory 2 Factory 3 Factory 4 Factory 5
Production
area
57,637m² 178,282m² 104,431m² 102,313m² 102,313m²
Key products .Petrochemical
Plant
.Shipbuilding
blocks
.Module
.HRSG .Column
.Reactor
.Evaporator
.Module
Production
shifting
Universal Universal Universal Universal Universal
Key facilities .Specialized
welding
facilities
.Pier
.Moving
shelter
.Crane
.Moving
shelter
.Pier
.Moving
shelter
.Pier
.Crane
6 5 4 3 2 1
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Superior production facility and advanced
core technology
Specialized overlay welding capability
of high alloys (Cr-Mo-V, Titanium, etc.)
Higher productivity and reduced
production time
High Alloy welding technology
Sungjin is the only player which
has 3 factories with piers
Closely placed with key heavy industry
players in Ulsan, one of the largest
industrial cities in Korea
Strategically located
production facilities
Moving shelter
Sungjin has 14 moving shelters in
5 factories which allows the
company to produce larger
products even under inclimate
weather conditions
6 5 4 1 2 3
SungJin focuses on
manufacturing high-value
added products with its
competitive production
facility and
industry-leading
technology
6 5 4 3 2
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Stringent quality control and recognition
by global customers
Maintaining the highest quality has been a key factor driving Sungjin’s growth
Continued partnership with leading global customers such as Hyundai Heavy, Chiyoda, NEM and Bechtel
Securing additional industry leaders as our customers such as Sidem (Evaporator) and Essar (Petrochemical reactor)
Regional quality certification to expand global customer base
6 1 2 3 4 5
Top 10 customers in 20101 Major international certifications
ASME-N ASME-NA ASME-NPT ASME-U
ASME-R ISO 9001 ISO 14001 OHSAS18001
KEPIC(MN) PED “H” Module SEML KEPIC(SN)
1 As of December 2010
4 6 5 4 3
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Order Backlog Orders
Wbn. Wbn.
CAGR
21.9% 274.6
439.7
586.9 606.5
424.1
CAGR
11.2%
Order & Order Backlog
6 5 4
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Financial highlights – Historical financials
Income statement (KRW billion)
2005 2006 2007 2008 2009 2010
Sales 181.7 214.9 361.7 520.1 380.1 370.6
Cost of goods sold 167.1 194.1 317.3 425.2 391.4 358.4
Gross profit 14.7 20.7 44.4 94.9 -11.3 12.2
Gross profit margin 8.1% 9.6% 12.3% 18.25% - -
Selling and administrative expenses 8.1 10.1 14.8 20 15 24.2
Operating income 6.6 10.6 29.6 74.9 -26.2 -12.0
Operating income margin 3.6% 5.0% 8.2% 14.40% - -
Non-operating income, net 0.8 8.1 -14.3 -306.6 87.8 25.1
Interest expense, net 3.0 2.9 5.7 -8.2 -20.6 -28.6
Foreign currency exchange gain, net -0.1 -0.8 0.1 -1.5 9.8 2.2
Foreign currency translation gain, net 3.0 1.4 -2.0 -14.7 -0.1 -5.2
Currency options transaction gain, net -0.7 2.4 2.6 -76.1 -6.0 9.8
Valuation of currency options gain, net -0.1 4.0 -8.5 -330.9 49.5 0.1
Ordinary income 7.3 18.8 15.4 -231.7 4.5 -41.8
Ordinary income margin 4.0% 8.7% 4.2% - 1.2% -
Income tax expense 1.8 5.5 5.0 -40.7 10.8 -29.9
Net income 5.5 13.2 10.4 -191.0 -6.3 -11.8
Net income margin 3.0% 6.2% 2.9% - - -
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Financial highlights – Historical financials (cont’d)
Balance sheet (KRW billion)
2006 2007 2008 2009 2010
Cash and cash equivalents 32.9 56.1 17.9 34.0 18.6
Trade receivables, net 85.8 188.3 265.2 285.3 295.5
Inventories 3.7 7.4 26.6 14.6 18.5
Other current assets 16.9 12.7 110.1 40.5 14.6
Total current assets 139.3 264.5 419.8 374.4 347.2
Property, plant and equipment, net 70.5 104.7 207.7 194.9 189.8
Other non-current assets 7.8 13.4 54.7 19.5 49.3
Total non-current assets 78.3 118.1 262.4 214.4 239.1
Total assets 217.6 382.6 682.2 588.8 586.3
Trade payables 33.8 59.3 70.2 38.4 67.1
Short-term borrowings 44.7 104.9 190.3 36.8 12.0
Current portion of long-term debt 23.9 5.2 8.2 0.2 104.1
Other current liabilities 15.8 26.4 162.3 181.6 46.7
Total current liabilities 118.2 195.8 431.0 257.0 229.9
Long-term borrowings 10.1 21.3 38.1 276.1 203.8
Other non-current liabilities 1.7 4.9 203.3 21.3 0.9
Total non-current liabilities 11.8 26.2 241.4 297.4 204.7
Total liabilities 130 222 672.4 554.5 434.6
Total shareholders’ equity 87.7 160.6 9.7 34.4 151.7
Total liabilities and shareholders’ equity 217.6 382.6 682.1 588.9 586.3
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Mid-term strategic objective
On track to achieve KRW1trn in sales by 2012
Capacity
Investment in major capital
expenditure will be completed
by 2010
Capacity expansion sufficient
for the mid-term strategic goal
has been secured
Profitability
Management focus on
margin improvement
Improving EBIT margin from
larger/ heavier product orders
New growth opportunities
Product portfolio shifting
Aggressive expansion into new
growth businesses
Module and Skid
— FPSO
— Offshore oil & gas facilities
MED-type desalination
evaporator