Samsung Heavy Industries

Samsung Heavy Industries
August 2008
Contents
Company Overview
Global Market
Future Strategy
HEAVY INDUSTRIES
Company Overview
· Business Highlights
· Financial Results
· Order Backlog
· Risk Management
· Construction Business
※ No. 3 Dry Dock (640m×97.5m)
3
Business Highlights
■ Rapid growth in revenue
■ Turnaround
8.5
(KRW, %)
24%
EPS
(KRWt)
Dividend Per Share
6.4
2100
Payout Ratio
Offshore
55
5.5
4.7
23%
77%
17%
Shipbuilding
p
g
18%
69%
68%
71%
37%
67%
24%
675
500
NA
324
Construction
150
14%
12%
10%
7%
2004
2005
2006
2007
2004
250
2005
250
2006
2007
-142
‰ After overcoming a surge in raw materials
‰ Strong order flows and SHI’s core competence
h
have
supported
t d to
t rapid
id revenue growth
th
prices
i
from
f
2004 to
t 2005,
2005 SHI’s
SHI’ profits
fit are
on the rise
4
Financial Results
(KRWb)
2006
2007
6,352
,
Shipbuilding
Construction
Operating profit
2008
1Q
2Q
Total
8,519
,
2,417
,
2,581
,
4,998
,
5,705
647
7,933
586
2,274
143
2,422
159
4,696
302
99
(1.6%)
457
(5.4%)
224
(9.3%)
192
(7.5%)
416
(8.3%)
Recurring profit
213
659
160
230
390
Non-OP income
Non-OP expense
358
244
364
162
203
267
108
70
311
337
154
485
116
168
284
Sales
Sa
es
(Margin)
Net profit
5
Order Backlog
Backlog : 47.6 US$b
Vessels
Offshore
40%
Portion of
backlog
Global
M/S
Remarks
31%
79%
· +10,000ft water depth
4%
30%
· +80,000 DWT
16%
32%
· +90,000 CBM
4%
100%
· First order in 2008
17%
30%
· +10,000 TEU
Drill ship
FPSO
LNG
Vessels
Ferries
20%
1%
Container
27%
Ships
LNG carrier
LNG FPSO
Large container
Tankers 12%
July. 2008
T t l
Total
72%
※ M/S Source: Clarkson, SHI, orders from 2005 to end-April 2008
6
Risk Management
■ SHI focuses on minimizing volatility of expected profit
Building Event
Time Gap(month)
Contract
Steel cutting
26
Keel laying Launching
4.5
2.5
Delivery
3.0
Currency
Receivables
Payables
Raw Materials
Main Engine
Machinery
Steel Plate
Bulk Parts
: Hedging, order
: Execution, delivery
‰ Foreign currency exposure has been fully covered through forward transactions since 2002
g engine
g
are ordered within 6 months just
j
after contract signing,
g g,
‰ Main machineryy including
while SHI has buffer in bidding price against unexpected price hike of raw material like steel plate
7
Construction Business
■ Business overview
■ Performance records
Revenue and profit
(KRWb,%)
1,200
Revenue
Operating profit
1,000
Civil
Construction
10.0%
9.0%
Building & Housing
8.0%
7 0%
7.0%
800
6.0%
600
5.0%
4.0%
400
Road
oad
Tower
o e pa
palace
ace
Chervill
C
e
Subway
Office building
Town house
Incineration plant
Factory building
Hotel
3.0%
2.0%
200
1.0%
-
0 0%
0.0%
2001
2002
2003
2004
2005
2006
2007
O d backlog
Order
b kl
Total 1.7 KRWt
Civil
construction:
31%
Building & housing:
69%
※ As of end-December 2007
8
HEAVY INDUSTRIES
Global Market
· Global Order Forecast
· Supply
S
l Forecast
F
· Competition Between
3 Major Countries
· LNGC Market
· Containership Market
· Offshore Market
※ Drill ship built by SHI (Stena Drillmax)
9
Global Order Forecast
■ Order will be placed in line with trade growth
Order (Mn. GT.)
180
Growth Rate (YoY, %)
LNG Carrier
Container
Tanker
Bulker
Others
Seabo ne Trade
Seaborne
T ade
World GDP
160
140
120
Single hull tanker:
57Mn GT(‘06E)
outt off 180M
180Mn GT
20
77
80
74
60
23
40
27
20
'00
00
'01
01
34
110
100
'99
99
153
'02
02
18
78
47
80
80
19
17
19
18
17
6
10
11
11
12
12
'03
03
'04
04
'05
05
'06
06
'07
07
'08
08
28
6 0%
6.0%
4.0%
23
22
80
10.0%
8.0%
25
67
18
Over 20 year Bulker:
53Mn GT(‘06E)
out of 190Mn GT
12.0%
2.0%
21
0.0%
'09
09
'10
10
Source: Clarkson, MSI, SHI
‰ Global economic recovery and rapid growth of Chinese economy lead shipbuilding order
‰ Regulation
g
changes
g and need for substitution prompt
p
p a rush of new orders
‰ Replacement orders for single-hull tankers and old bulk carriers enlarged total orders in 2006 and 2007
10
Supply & Demand
■ Supply and demand will be balanced
Order, Delivery (Mn. GT.)
250
Backlog
g Year
4.5
Slippage
200
Order
Delivery
4.0
Normal Backlog
35
3.5
Adjusted Backlog
3.0
150
153
100
50
110
38
1
37
77
41
41
74
48
67
1
47
54
1
63
9
53
54
2.5
77
12 78
65
94
12
2.0
93
10
80
82
1.5
80
83
0
1.0
0
0.5
-
'03
03
'04
04
'05
05
'06
06
'07
07
'08(F)
08(F)
'09(F)
09(F)
'10(F)
10(F)
Source: Clarkson, SHI
‰ Shortage of steel plates, skilled workforce and low productivity is bottleneck for increasing global
shipbuilding capacity
‰ Adjusted order backlog considering slippage is around 4 years in 2010, while normal order backlog
is 3.2 years
11
Competition Between 3 Major Countries
■ Korea’s focus on high end ships
(US$/GT)
(M/S based on No.
No of ships )
80%
2,500
Korea
70%
60%
China
Price per GT (RHS)
J
Japan
2,000
50%
1,500
,
40%
30%
20%
1,000
10%
0%
500
CAPE BC
VLCC
S-MAX
S
MAX
A-MAX
A
MAX
PAX CONT
8000+ CONT
LNGC
Source: Clarkson, end-2007
‰ Korean shipbuilders focus on higher-value added ships while Japan and China focus on
lower value orders
12
LNG Carrier Market
■ LNG carrier demand
■ Market situation
LNG movement and carrier fleet
2006
LNG Trade
(Mn Ton.)
Ton )
Fleet
(Vessels)
2010
Opportunity
2015
Average
growth p.a.
160
240
390
11%
223
373
546
36 vessels
‰ Strong demand for LNGCs in the USA and China
‰ More than 60 LNG carriers are over 25 years old
‰ LNG carriers are becoming larger
Threat
‰ LNG terminal construction delayed due to
environmental concerns
Source: Andy Flower, Clarkson
Order forecasts
‰ Political risks and technical-resource shortages
in some regions
(Number of vessels)
70
40
22
'01
18
16
'02
'03
33
22
'04
'05
Larger carrier (220K+)
Average: 34
'06
25
30
35
37
Answer is …
LNG FPSO
LNG RV / LNG FSRU
'07 08(E)09(E)10(E)11(E)
13
Containership Market
■ Container boom will continue
(Fleet: Mn. TEU)
16 0
16.0
(Traffic: Mn. TEU)
180 0
180.0
6200+ teu
4600 teu
14.0
160.0
3000 teu
12.0
65
6.5
2000 teu
<1000 teu
10.0
140.0
5.3
120.0
4.4
Traffic
3.7
8.0
6.0
1.6
4.0
1.8
2.4
2.0
23
2.3
2.0
100.0
3.0
2.5
2.9
3.3
3.8
4.1
80.0
60.0
2.0
40.0
-
20.0
'99
'00
'01
'02
'03
'04
'05
'06
‰ Needs for containerships to increase at least 10% pa after 2010
‰ Post-Panamax to lead containership market
14
'07
'08
'09
'10
Source: Clarkson
Containership Market
■ Panama Canal expansion plan
▷ Completion date: 2014
▷ Size change
- Panama Canal
Current
New
Length
305 m
427 m
Breadth
33.5 m
55 m
Water
Depth
16.0 m
18.3 m
- Maximum ship size
Current
New
Length
294.3 m
366.0 m
Breadth
32 3 m
32.3
48 8 m
48.8
Draught
12.0 m
15.3 m
‰ 12,600 TEU containership - the maximum ship size for the new Panama Canal - lead the market
15
Offshore Market
■ Offshore business opportunity
Oil well development is needed
New supply will be in deep water
(TOE)
200
100
New
180
90
Existing
160
80
Oil Price
140
70
120
New oil well supply
(+6~8%/year)
100
80
60
50
40
Existing oil well supply
(-4~6%/year)
60
40
30
20
20
10
0
'90
'95
Source: EIA
'00
'05
'10
'15
'20
Source: World offshore oil & gas forecast
‰ Oil exploration boom has been driven by
rapid increase in oil consumption and
significant decrease in existing oil well supply
‰D
Deep-water
t production
d ti tto meett strong
t
demand
‰ Shipbuilders equipped with high-tech skills
and knowledge to benefit
p
g oil reserves,, oil prices
p
to
‰ Due to depleting
remain strong for some time
16
Offshore Market
■ Offshore facilities
Exploration
Shallow
w Water
Jack up
■ Deep water project forecasts
Deep water rig
Production
Fixed platform
Average: 10
Drill ship
F.P.S.O
Source: Petro data
Deep
p water production
p
facilityy
Deep Watter
20
15
Semi rig
g
F.P.U
SPAR
TLP
SEMI
FPSO
Average: 7
10
5
7
3
0
'06
6
'08
7
6
'10
9
8
'12
Source: Infield
17
HEAVY INDUSTRIES
Future Strategy
· New Business Frontier
· New
N C
Construction
i Method
M h d
· Globalization Strategy
※ Fixed platform built by SHI for Sakhalin
18
New Business Frontier
Icebreaking Tanker
Ice Drillship
Ice Container
LNG FPSO
LNG FSRU
16,000teu Container
‰ Growing environmental awareness creating eco-friendly product markets
‰ Innovative technology and shrinking oil reserves are triggering new Arctic oil production era
‰ Increasing demand for new products provides SHI with new business opportunities
19
New Construction Method
■ Maximizing dock capability
■ Production process
(Bl k size)
(Block
i )
N off bl
No.
blocks
k
D k ti
Dock
time
Old methods
(300 tons)
100 blocks
60 days
Mega block ('
('01)
(3,000 tons)
10 blocks
45 days
Giga block ('
('07)
(5,000 tons)
6 blocks
30 days
Tera block ((''08)
3 blocks
25 days
(10,000 tons) (115,000톤 유조선 기준)
Mega block assembly
Floating crane lift
Laying on F. dock
Launching
Crude oil tanker: 115K
‰ Combining floating docks and cranes significantly reduces dock time and maximizes
efficiency
‰ New construction methods are the best way to satisfy growing market demand
20
Globalization Strategy
■ Global base
Shipyard
Overseas subsidiary
Branch office
Moscow
Oslo
London
Rongcheng
Athens
Houston
Ningbo
Houston
Dubai
India
T k
Tokyo
Koje
Shipyard
Malaysia
Brazil
Singapore
China
block
factory
Offshore
engineering
center
Ningbo(Start :1997)
,
tons in 2007
- 150,000
- 200,000 tons in 2010
Rongcheng(Start: 2007)
- 10,000
,
tons in 2007
- 300,000 tons in 2010
Houston
- Production facility
engineering design
India
- Production facility
basic design
Brazil (Atlantico Shipyard)
- Asset US$780m, Capital US$220m (SHI:10%)
- Suezmax, VLCC, Semi Rig
g Hull
Shipyard
Joint
Venture
‰ Global production and engineering bases enable SHI to meet ship buyers’ demands
21
Disclaimer
This presentation has been prepared by Samsung Heavy Industries Co., Ltd. and
contains forward
forward--looking statements, that are subject to risks, uncertainties, and
assumptions. The presentation is solely for your information, subject to change
without notice
notice, and makes no representation or warranty,
warranty expressed or implied and no
reliability should be placed on the accuracy, fairness, or completeness of the information
presented herein. The Company, its affiliates or representatives accept no liability for
any losses arising from any information contained in the presentation.
The contents of this presentation may not be reproduced, redistributed or circulated,
directly or indirectly, to any other person or organization, or published, in whole or in
part, for any purpose.
22