POSCO Financial Highlights CEO’s Letter 004 002 Board of Directors 010 2009 Annual Report Industrials Republic of Korea Headquarters 1, Goedong-dong, Nam-gu, Pohang Gyeongsangbuk-do 790-785, Korea Tel. 82-54-220-0114 Fax. 82-54-220-6000 Seoul Office POSCO Center, 892, Daechi-4-dong Gangnam-gu, Seoul 135-777, Korea Tel. 82-2-3457-0114 Fax. 82-2-3457-6000 Pohang Works 5, Dongchon-dong, Nam-gu, Pohang Gyeongsangbuk-do 790-785, Korea Tel. 82-54-220-0114 Fax. 82-54-220-6000 Gwangyang Works 700, Geumho-dong, Gwangyang Jeollanam-do 545-711, Korea Tel. 82-61-790-0114 Fax. 82-61-790-7000 Through Vision Poreka 032 014 022 Through Growth Review of Operations Steel E&C IT 060 064 068 044 052 056 042 Energy R&D Environment Milestones 078 Social Contribution 072 Consolidated Financial Statements Global Network 176 178 180 080 Executive Officers Investor Information www.posco.com Side view of POSCO magnesium coil including upstream raw materials markets and downstream consuming industries. As major Korean steelmakers such as Hyundai Steel, Dongbu Steel, and Dongkuk Steel begin to operate new facilities this year, steel production is expected to increase more than 12 percent over the previous year, intensifying domestic competition. In addition, the rising p y g p g price of iron ores and coking coal, as well as p g pricing g system negotiations, will be difficult business challenges. Investing in long-term growth and increased synergy among POSCO companies To lay the basis for global growth, we will finish land acquisition and begin construction of our integrated steel mill in India, while stepping up our efforts to secure rights to explore mines. In September we also will start construction of a Continuous Galvanizing Line in India to meet their rapidly rising demand for automotive steel. We will also establish a joint venture to build an integrated steel mill in Indonesia and begin construction j g g as soon as possible. To respond to a changing industrial landscape, we are striving to become a comprehensive materials company, actively exploring new business opportunities, while solidifying our steel business. In this process, our subsidiary companies will play an important role in completing the POSCO Group’s portfolio of businesses. We will help POSCO subsidiaries contribute to creating a POSCO Family management system. We will grow along with our subsidiaries by adopting a win-win strategy and encouraging cooperation. We will help our Engineering & Construction, Energy, and ICT subsidiaries evolve into the future, facilitating growth and synergy at the group level. As CEO, I am fully committed to open communication and a trust-based corporate culture to successfully direct these activities. POSCO’s management and executives will set the example for self-dedication and taking the initiative to make POSCO a respected company not just in Korea but throughout the world. Pursuing the New Initiatives Starting this year, we will implement the POSCO 3.0 Initiatives to help us grow as a comprehensive materials company focused on steel, developing future growth engines, expanding onto the global stage, and innovating our operations. Our management plans this year include a “management for survival” initiative to be ready for the possibility of a long-term recession, and at the same time an “aggressive management” initiative to seize business opportunities. We believe these efforts will strengthen our core competitiveness and lay the foundation for long-term growth. Reinforcing our market strength and reducing costs POSCO has a stretch target of producing 34 million tons of crude steel and selling 32 million tons of finished products by solidifying our market positions at home and abroad. We will successfully complete the construction of new facilities such as New Steel Making Plant in Pohang and s Ne Gwangyang Plate Plant in the second half of this year and start operating them as soon as possible. We will rt w strengthen our strateg c customer relationships through differentiating marketing activities such as the POSCO strategic iating Partner Program and we will increase the number of overseas SCM bases to 48, further reinforcing our export nd M foundation foundation. In addition, we will continue to reduce costs by more than KRW one trillion this year, as we have done each year over the past four years. Even though it becomes more difficult to uncover new ways to cut expenses, we have set a challenging goal to reduce costs by KRW 1.15 trillion, while expanding the number of areas that will contribute. Maximizing our value with technological leadership and stable materials procurement Today, operational leadership is not enough to create a competitive advantage in our industry. As added value swiftly moves into proprietary technology and downstream areas, technological prowess and stable materials procurement become key to competitiveness. POSCO therefore intends to further our technological leadership by increasing R&D investment to a record KRW 500 billion. We plan to promote the development and sales of “World Best” and “World First” products, which are also far more profitable. We will increase sales of these products to 3.9 million tons, 1 million tons higher than the prior year. Additionally, we plan to develop more than 160 “Breakthrough for low-cost high-quality” technologies. These will creatively solve technological problems and contribute to lower-cost, higher-quality production systems. We will also use FINEX, POSCO’s innovative steelmaking technology, to implement our global growth strategy. Finally, we will continue to invest in mining to secure our access to raw materials. We are committed to achieving a self-sufficiency rate of 30 percent by 2012 through early-stage mine development and joint-venture investments with mid-sized suppliers. Looking Ahead Like the recent series of earthquakes, there have been rapid changes in the global economy. These threaten the very survival of businesses, as even global companies with over 100 years of history are faltering in the face of competitive changes. nge Peter Drucker says, “T best way to predict the future is to create it.” With the POSCO 3.0 Initiatives, eter The te Initiativ we demonstrate the will, wisdom, and vision to respond to today’s business landscape, where markets are e w y’s fluctuating and time-proven paradigms are readily replaced with new ones The POSCO 3 0 Initiatives will also time-p ones. 3.0 hasten our way to achieving “Vision 2018”, which sets a goal of KRW 100 trillion of sales for POSCO’s 50th anniversary. POSCO people and the POSCO Family of subsidiaries are now well aware of what we have to do to achieve this vision—Business Evolution. We all know where we need to go—Market Expansion. We all know how to innovate our work—Operations Innovation. As you have done thus far, I know you will continue to give support and encouragement to POSCO’s people in this process of implementing the POSCO 3.0 Initiatives. Finally, I promise to fulfill my duty with a strong will to never be daunted by any obstacles and to live up to the expectations and trust of our highly valued and respected shareholders, customers, and society. 2009 POSCO ANNUAL REPORT 008 Thank you. Joon-Yang Chung Chief Executive Officer pp 8-9 The outlook discussion in the POSCO report is situated in the CEO statement. Although not hugely detailed, it does include reference to both financial and non-financial issues which the business faces and states the management belief and commitment in running the company to live up to the expectations and trust of their shareholders, customers and society. www.blacksunplc.com © Black Sun Plc 2011 57 / 009 TRUE THROUGH AND THROUGH
