Highlights Performance Review 3. Business Strategy & Vision , Mid & Long-term Business Plan 5. Major Issues 6.

Transcription

1 4. Performance & Plan DAEWOO E&C Highlights Performance Review 3. Business Strategy & Vision , Mid & Long-term Business Plan 5. Major Issues 6. APPENDIX This document is provided for the convenience of investors and contains preliminary financial data that may be amended following the release of the Company's 2007 Audit Report. While every care has been taken to ensure the reasonableness of our estimates, date on 2008 prospects is based on necessary assumptions and thus may differ from final reported results.

2 Highlights 2007 Highlights No.1 in construction capability evaluation for second consecutive years Second consecutive designation confirms Daewoo s status as Korea s No. 1 construction company. 5thstraight year as No.1 in Housing Sales Korea s No.1 homebuilder since Posted a company record with 15 order acceptances for reconstruction/redevelopment projects. GK Fixed Road tunnel, successful completion of immersed element immersion and connection World s largest immersed tunnel The first new method of construction adopted in Korea Selected as prefered bidder for Cheonan international business park KRW 7tn investment to build 2.91 mil m 2 complex. Being completed in 2012 Contract to build combined-cycle power plants in Libya US$ 847 million equivalent order Realizing synergies with Kumho Asiana Group affiliates BisPhenol-A plant expansion for Kumho P&B; Order accepted to build Phenol & Acetone Revamping plant Effective bridgehead to enter related petrochemicals market Vision promulgation ceremony Global E&C Leader, creating the beautiful future Jong-uk Seo takes the helm as CEO 2

3 Performance Review 2007 Performance Review Achieving the 1st position in Sales and Profitability among peers Ranked 1st in Construction Capability Evaluation for second consecutive years New Orders Sales Housing Plant Housing Plant 8,447 21% 4% 9% 50% 10,020 7% 14% 18% 45% 5,729 2% 14% 8% 22% 38% 6,066 2% 8% 11% 22% 41% Operating Profit 627 (11.0%) 561 (9.3%) Profit before tax 631 (11.0%) 1,317 (21.7%) Construction Capability Rank Subject Daewoo 2nd (3,932) 3rd (4,232) 2nd (5,461) 1st (6,730) 1st (7,664) Samsung 3rd 1st 1st (5,936) 2nd (6,210) 2nd (6,815) G S 4th 6th 5th (4,351) 4th (5,420) 3rd (6,160) Hyundai 1st 2nd 3rd (5,371) 3rd (5,480) 4th (6,119) D a e l i m 5th 5th 4th (4,732) 5th (5,300) 5th (5,403) Source : Construction Association of Korea Construction Capability Evaluation: the capability that each company is able to construct, which is represented in a currency, alone with the consideration on previous year s performance, management and technical capability. 3

4 3. Business Strategy & Vision Domestic & Market Environment Likely to be weak in Domestic, but strong in Market Domestic Housing/ (Unit : KRW tn) (F) 2010(F) SOURCE : Bank of Korea, Construction & Industry Research Institute New governmental measures expected to ease regulations on the real estate market Private/Public PF deals with local governments expected to increase engineering orders will rise with launch of large-scale development projects like Administration Complex cities. Housing/ Plant (Unit : $US bn) (F) 2010(F) Source : Ministry of Construction and Transportation, overseas construction associations Increasing orders for energy exploration, gas fields and petrochemical plants from the Middle East Increasing orders for new city developments and residential complex cities in Vietnam, Algeria, etc. 4

5 3. Business Strategy & Vision Business Strategy Set up differentiated strategies to optimally response to Domestic and market environments Market Environments Domestic Oversea Low Growth High Growth Strategy Strengthen sales force capability in public sector business - Integrate domestic sales divisions to maximize success rates for TK/Alternative bids Expand Investment- Development Business - Actively promote investment-based business such as PF Maximize Group Synergy - Secure orders from Group affiliates Selection & Focus - Focus on Daewoo s competitive Edges in terms of countries (Nigeria, Libya, Qatar) and business areas (Oil & Gas, Power plant) Expand Investment- Development Business - Aggressively pursue PF projects in China, Vietnam, Algeria Reinforce Global EPC capacity - Acquire local or overseas engineering firms, Seek alliances 5

6 3. Business Strategy & Vision Strategies by Sectors Develop effective strategies to actively response to each market environments Housing Reinforce position in new business segment (Remodeling, City improvement projects) - Yongsan International Business City (KRW 208 bn) Enhancing Development Business leveraged by the capacity for Domestic Housing Establish new growth drivers(soc, Proposal-based development projects) large-scale civil projects (Nigeria Brass LNG PJ) Large-scale complex development (PF, City rehabilitation) - Cheonan international business park(krw 7 tn) Expand overseas development business - Vietnam Hanoi new city(u$4.5bn), Giang vo/metri(u$ 6bn) Plant Focusing on areas where Daewoo have enjoyed its dominant competitiveness Fostering capacity for new growth business (Photovoltaic power generation facilities) New entry into petrochemical sector, leveraging Group affiliates (BR, SBR PJ) Sales Headquarters Greater Order Acceptance 6

7 3. Business Strategy & Vision Vision Global E&C Leader, Creating the Beautiful Future Global EPC Development Business Maintain and improve Existing Capabilities Enhance EPC capability Focus on major business areas (Gas, Waste, Power plant) Expand overseas business in the areas with competitive edges(nigeria, Libya, Qatar, Vietnam) Expand in-house projects, emphasis on private/public sector PF projects Maximize order acceptance in Remodeling, City renovation projects Expand investment development business in Southeast Asia Reinforce Prugio brand value Optimize project management system Strengthen external procurement management system 7

8 , Mid & Long-term Business Plan 2008 Business Plan Achieve the top business results among peers New Orders New orders Order backlog 6,055 14,112 5,592 15,117 8,190 18,472 8,447 21,330 10,020 25,399 12,386 31, Sales & Operating Profit Margin Sales OP Margin 7.4% 4, % 4, % 5, % 9.3% 9.0% 6,777 5,729 6,

9 , Mid & Long-term Business Plan Mid & Long-term Business Plan New orders of KRW 27tn and Sales of KRW 19tn by 2015 business weight of 40% by 2015, via 31% in 2010 New Orders/Sales New orders Sales 27,511 12,386 6,777 13,540 7,576 15,334 8,705 17,001 10,371 19,021 11,440 Order CAGR 12.1% Sales CAGR 15.8% 18, (F) 2010(F) 2011(F) 2012(F) 2015(F) Business portfolio Domestic 84% 69% 60% 31% 40% Housing Plant Other 2% 1% 1% 8% 11% 31% 30% 30% 41% 40% (F) 2015(F) 9% 12% 17% 22% 12% 7% 10% 9

10 5. Major Issues Strategies for Core Corporate Value Implementing diverse strategies to increase corporate value Strategies 1. Balanced Business Portfolio Expand into domestic & overseas development projects Use overseas strongholds to expand regionally, eg. Kuwait, Saudi Arabia 2. Synergies from group affiliates Secure new growth driver through the acquisition of Korea Express Participate in Kumho Asiana Group projects as well as overseas development project 3. Shareholder-friendly policies Active Shareholder-friendly measures Maintain high level of Dividend Payout Ratio in industry Global E&C Leader 10

11 5. Major Issues Shareholder-friendly Strategies Taking active measures to provide shareholder value through Dividend & Share Buyback Dividend Share Buyback Maintain current level of payout which is highest in industry More than KRW 500bn in payouts over a 3 year period - 07 : KRW 500 per share - After 08 : Though aim to maintain same level of payout, final decision will only be made after taking into account market conditions and company profits More than KRW 1tn will be spent on share buyback over the next 5 years - 08 : KRW 200bn - 09 : KRW 300bn - After 10 : Remaining amount Such repurchased shares will be cancelled by the company so that the value of the remaining number of shares goes up Procurement of Funds Extra Cash Generation of extra cash through free cashflow expected to total KRW 300bn every year Disposal of Non-core Assets Early disposal of non-core assets worth around KRW 750bn in terms of book value 11

12 5. Major Issues Orders Growth Pursuing opportunities in countries with competitive edges Business opportunities by Region 3,760 (unit : USD mil) ,320 1,769 1,000 2,296 1,948 1, Petrochemical Power Plant (unit : USD mil) Region Country Type Value Petrochemicals 1,767 Nigeria Power plant 550 1,489 Africa Libya Power plant/architecture 1,145 Algeria Petrochemicals /architecture Others 264 Middle east Qatar Kuwait Petrochemicals Petrochemicals 669 1,610 1,100 UAE 650 Asia Vietnam Power plant 500 1,900 Others Others Others Petrochemicals Power plant Total 16,600 12

13 5. Major Issues Group Synergy Estimated Value Created by Group Synergy: KRW 3.3tn over next 3 years by Year Domestic (F) 2010(F) by Affiliate Domestic 1, Airlines Industrial Petrochemical P&B Polychem Logistics Tires Petro-chemical Secure orders from Group affiliates, Participate in construction of petrochemical plant business Through intra-group petrochemical licenses, seize marketing advantages for overseas expansion Industrial Expand order acceptance using brand value of the Group, eg. Vietnam and UAE Airlines Relocation of US. military bases (Kunsan (KRW 200bn)/Osan(KRW 50bn)) 13

14 5. Major Issues Synergy from Korea Express Acquisition Estimated Synergy Value of KRW 8.2tn from the Acquisition of Korea Express over next 5 years. Background New key drivers for sustainable growth in the stagnant domestic construction market Anticipated potential synergies from the Korea Express acquisition Potential Synergies 1. Construction of Harbor/logistics center [KRW 3.1tn] 2. Expansion of business opportunities in Libya [KRW 2.7tn] Cooperative development of harbor within Korea Express overseas stronghold Construct bus and cargo terminal in China, Vietnam Share of Libya ANC (Joint company with GMRA(Great Man- Made River Project Authority)and Korea Express) raised to 50%. Huge opportunity for large-scale orders 3. Construction of Domestic logistics center [KRW 0.6tn] Increase the chances of order wins in new logistics terminal projects in Seoul and Daejeon City 4. Expansion of private SOC projects [KRW 1.1tn] Actively participate in container port SOC projects by leveraging Korea Express s port management rights 5. Utilization of Korea Express s land assets [KRW 0.7tn] Utilize Korea Express s land assets located in some of the key areas to construct residential complex 14

15 6. APPENDIX FINANCIAL STATEMENTS Balance Sheet Cash & CE ,013 Receivables 1,036 1,200 1,380 1,764 2,291 Inventories Investments Land & Buildings Other Assets 1,270 1,167 1,248 1,290 1,651 Total Assets 5,301 5,217 5,601 6,085 6,699 Payables Borrowings 1,268 1, Other Liabilities 1,475 1,427 1,475 1,684 2,057 Total Liabilities 3,398 3,148 3,175 3,311 3,638 Capital 1,673 1,696 1,696 1,696 1,629 Retained Earnings ,084 1,852 Other SE (-)210 (-)150 - (-)6 (-)420 Total Shareholders Equity 1,903 2,069 2,426 2,774 3,061 Income Statement Sales 4,231 4,780 5,076 5,729 6,066 Gross Profit Margin (%) 493 (11.6%) 616 (12.9%) 667 (13.1%) 896 (15.6%) 863 (14.2%) SG&A Operating Profit (%) 313 (7.4%) 425 (8.9%) 432 (8.5%) 629 (11.0%) 561 (9.3%) Non-operating Revenue Non-operating Expenses Ordinary Income (%) 227 (5.4%) 372 (7.8%) 558 (11.0%) 643 (11.2%) 1,317 (21.7%) Tax Net Income

16 6. APPENDIX Private Investment SOC Project Share Investment Value Remarks Mokpo new port 20.00% Completed in 04 Ilsan great bridge 24.50% Completed in 07 Yongin-seoul expressway 14.56% To be completed in 09 Youngchun-sangju expressway 7.50% To be started in 08 Wooi - Shinsul light subway 18.54% To be started in 08 Suboo Expressway 4.00% To be started in 08 2nd Western Costal Express way 17.00% To be started in 08 Garorim tidal power generation 13.77% To be started in 08 Gaya railroad 23.00% To be started in 08 Seoul expressway 10.00% Completed in 07 Ulsan new port 16.90% To be completed in 09 3rd Kyongin expressway 17.68% To be completed in 09 GK Fixed Link Road 43.45% To be completed in 10 Myungji great bridge 18.38% To be completed in 10 New Bundang railroads 13.46% To be completed in 10 16

17 6. APPENDIX 2007 Performance by Sector New Orders Sales Unit : KRW bn Housing 4,253 4,466 Housing 2,175 2,388 1,369 1,829 1,271 1, , Plant Plant ,729 1, New Orders 8,447 10,020 Sales 5,729 6,067 Order Backlog Gross Margin Housing 10,661 12,739 Housing 20.3% 21.9% 5,112 5, % 12.1% 1,646 2, % 15.3% Plant 1,059 1,324 Plant 10.0% 8.0% 2,852 3, % 3.5% Order Backlog 21,330 25,512 Gross Margin 15.6% 14.2% 17

18 6. APPENDIX 5-year Business Plan New Orders Housing Plant 12,386 25% 7% 13% 39% 13,540 27% 7% 13% 37% 15,334 30% 7% 13% 35% 17,001 31% 7% 12% 15% 34% 19,021 33% 7% 12% 15% 33% Housing Plant New Orders 4,821 1,940 1, ,063 12, (F) 5,028 2,135 1, ,624 13, (F) 5,312 2,413 1,946 1,061 4,601 15, (F) 5,810 2,630 2,121 1,157 5,283 17, (F) 6,332 2,867 2,312 1,261 6,250 19, (F) 2010(F) 2011(F) 2012(F) Order Backlog Housing Plant 31,188 6% 10% 20% 48% 37,190 18% 6% 11% 18% 47% 43,871 20% 5% 11% 18% 46% 58,203 50,559 Housing 22% 21% 5% 5% 11% 11% 17% 17% Plant 46% 44% Order Backlog 15,023 6,205 3,225 1,735 5,000 31, (F) 17,484 6,861 4,026 2,079 6,740 37, (F) 20,224 7,776 4,838 2,380 8,653 43, (F) 23,011 8,754 5,710 2,698 10,386 50, (F) 25,792 9,796 6,647 3,030 12,938 58, (F) 2010(F) 2011(F) 2012(F) 18

19 6. APPENDIX 5-year Business Plan Sales Housing Plant 6,777 23% 8% 12% 20% 37% 7,576 25% 8% 13% 20% 34% 8,705 31% 9% 13% 17% 30% 10,371 34% 8% 12% 29% 11,440 32% 8% 12% 31% Housing Plant Seles 2,537 1, ,539 6, (F) 2,567 1, ,884 7, (F) 2,572 1,498 1, ,688 8, (F) 3,023 1,653 1, ,550 10, (F) 3,551 1,825 1, ,698 11, (F) 2010(F) 2011(F) 2012(F) Gross Margin 13.8% 14.0% 13.8% 13.4% 13.4% Housing 18.0% 2009(F) 17.0% 2010(F) 16.4% 2011(F) 16.4% 2012(F) 16.4% 932 1,058 1,199 1,387 1,533 Plant 12.7% 11.9% 11.9% 13.6% 12.2% 11.6% 12.6% 12.9% 11.7% 10.4% 12.9% 10.8% 10.2% 12.9% 10.7% 9.6% 11.9% 13.0% 13.0% 13.0% Gross Margin 13.8% 14.0% 13.8% 13.4% 13.4% 2009(F) 2010(F) 2011(F) 2012(F) 19