Hyundai Merchant Marine Co., Ltd. August 2010
Important Notice This presentation contains forward looking statements, that are based on Hyundai Merchant Marine s current expectations, prospects, assumptions, market view and strategies. These statements are subject to risks and uncertainties as various factors may cause actual results to differ materially. We undertake no duty to update or revise any forward looking statements, whether as a results of new information, future events, or otherwise.
Table of Contents Ⅰ. Company Overview 1. Business Portfolio 2. Fleet Portfolio 3. Fleet Expansion Plan 4. HMM s Competitiveness Ⅱ. Performance Review 3
1. Business Portfolio Historical Business Portfolio Total Container Wet Bulk Dry Bulk (Unit : KRW Bn) Historical Operating Profit Container Wet Bulk Dry Bulk Total (Unit : KRW Bn) 5,541 5,190 32% 32% 15% 15% 8,003 5,119 5,092 19% 4,846 4,644 4,734 19% 13% 3,945 18% 16% 18% 16% 19% 12% 18% 18% 12% 18% 16% 18% 66% 16% 68% 53% 73% 64% 66% 66% 53% 73% 64% 66% 900 700 7,137 15% 15% 458 490 6,115 500 300 100 100 300 500 108 303 555 466 97 314 587 565 336 700 Diversified portfolio enables HMM to generate stable earnings. Along with our major container and cash generating tanker business, we re seeking opportunities to expand the dry bulk segment. 4
2. Fleet Portfolio As HMM pursues balanced revenue mix, we will keep operating fleet diversified. (As of Aug 2010) Owned Chartered Total No. 1,000 Dwt Capacity No. 1,000 Dwt Capacity No. 1,000 Dwt Capacity 6,000TEU 9 799 68 16 1,331 113 25 2,130 181 Container* 3,000-6,000TEU 13 843 64 8 504 39 21 1,347 103 3,000TEU 13 309 26 13 309 26 Container total 22 1,642 133 37 2,144 177 59 3,787 310 Gas carrier** 6 454 790 6 375 581 12 829 1,371 Wet Bulk Crude tanker 9 2,437 13 3,011 22 5,448 Other tanker 2 101 10 536 12 637 Wet bulk total 17 2,992 790 29 3,922 581 46 6,914 1,371 Capesize 10 1,636 6 1,108 16 2,744 Panamax 10 752 10 752 Dry Bulk Supramax 15 789 15 789 Handy 1 38 9 240 10 279 Heavy Lift 5 133 5 133 Dry bulk total 11 1,675 45 3,023 56 4,697 Total 50 6,309 111 9,089 161 15,398 * Contaner capacity : 1,000 TEU (Owned and Chartered over one year) ** Gas carrier capacity : 1,000 CBM 5
3. Fleet Expansion Plan HMM s investment strategy is based on Balanced fleet acquisition and Optimization in use of resource. Currently, we are seeking opportunity to expand fleet, especially dry bulkers, at attractive vessel price. Vessel ltype Size 2010 2011 2012 Own Charter Own Charter Own Charter Container 6,350 TEU 1 12,500 TEU 5 Capesize 1 3 4 2 1 1 Dry Bulk Panamax 1 Supramax 3 3 2 1 Handy 10 4 2 Total No. of new vessels 1 17 4 10 3 9 (Owned and chartered more than two years) 6
4. HMM s Competitiveness Container Focus on Profitability Outstanding Operating Profits Margin On time delivery High utilization ratio HMM NOL Hanjin MOL NYK 10% Reliability Customer relationship Optimize match back ratio Advanced IT Solution 5% 0% 4% 4.0% 3.2% 8% 0.2% 0.1% 5% 11% 10% Premium Brand Yield Management 15% 20% FY2008 FY2009 2010 1H Strategically weight on Profitability. With advanced IT system, worldwide sales network makes yield management efficient. Strong partner relationship, driven by premium service and customer satisfaction. 7
4. HMM s Competitiveness Strategic Investment Wet Bulk Consecutively Positive Profit in Wet Bulk (Unit : USD Mn ) (VLCC) (OP Margin) Tanker OP margin WS (pt) 200 10 30% 200 VLCC NB Price 150 7.5 15% 150 100 5 0% 100 50 0 5 VLCC Delivery 4 4 3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2.5 0 15% 30% 2003 2004 2005 2006 2007 2008 2009 2010 1H 50 0 (Source: Clarkson, HMM Data) Competitive fleet price is the biggest assets of HMM s Tanker business. Outstanding balance between SPOT and Long term contracts allows stable profits. 8
Table of Contents Ⅰ. Company Overview Ⅱ. Performance Review 1. Overall Result 2. 2010 Guidance 3. Container 4. Wet Bulk 5. Dry Bulk 6. Summary Financial Statements 9
1. Overall Results Revenue Operating Profit & Margin Container Wet bulk Dry Bulk 2010 Q1 2010 Q2 2009 Q2 1,756 356 328 1,071 QoQ 16% 2,041 349 278 1,414 YoY 42% 1,433 166 292 975 12% 2% 7% 8% 1% 10% 2% 13% 5% 24% 8% 10% 2010 Q1 2010 Q2 2009 Q2 Container Wet Bulk Dry Bulk Total (Unit : KRW Bn) 2010 Q1 2010 Q2 2009 Q2 YoY Container 1,071 1,414 975 42% Wet Bulk 328 278 292 9% Dry Bulk 357 349 166 103% Total 1,756 2,041 1,433 39% (Unit : KRW Bn) 2010 Q1 2010 Q2 2009 Q2 Container 25 175 131 Wet Bulk 23-13 24 Dry Bulk 36-6 39 Total 12 156 146 OP Margin 0.7% 7.6% 10.2% 10
2. 2010 Guidance Profitability Stability Growth Freight Rate Recovery Secure COA Contracts Vessel Investment Cost Reduction Risk Management Develop New Business Recovery in 2010 Classification 2009 2010 (E) YoY 2010 1H Achieve Revenue (KRW bn) 6,115 7,137 16.7% 3,797 53.2% Operating Profit (KRW bn) 565 336 Turn Black 168 50.0% Volume (1,000 TEU) 2,511 3,050 21.5% 1,331 43.6% CAPEX (KRW bn) 256 518 102.3% 11
3. Container HMM Freight Rate Trend 120 100 80 60 40 Transpacific E/B Asia Europe W/B Intra Asia W/B Trade volume and freight rate increased in response to global economic recovery. TPS GRI (1 May) succeeded and early imposition of PSS was conducted. Cost rationalization led to reduction in cargo unit cost. HMM Utilization Ratio HMM Volume Trade 110% 100% 90% 80% 70% 60% 50% Transpacific E/B Asia Europe W/B Intra Asia W/B 589 176 131 676 Transpacific Asia Europe Intra Asia 729 663 668 694 621 224 528 718 613 211 207 205 211 212 187 188 164 157 161 147 161 158 166 156 140 135 282 318 341 295 235 276 297 326 345 285 Source: HMM data (Unit : 1,000 TEU) 12
3. Container Investment on terminals for premium services and cost reduction. MV2 WUT CUT Busan Kaohsiung Terminal Capacity Remarks California United Terminal (CUT) 950K TEU Washington United Terminal (WUT) 650K TEU Kaohsiung Terminal Busan New Port 2-2 430K TEU 2,000K TEU Massvlakte 2 - (Consortium) 4,400K TEU Open in 2013 13
4. Wet Bulk WS remained firm in 2010 1H supported by strong crude oil demand from Asia centering China, India etc. VLCC & LNG profitability underperformed due to dry docking. Product tanker &LPG market remained low. Revenue Mix Spot vs. Fixed Crude Tanker Product Tanker LNG LPG 5% 3% 3% FIXED SPOT 21% 26% 29% 12% 12% 11% 51.1% 30.7% 36.5% 62% 59% 58% 48.9% 69.3% 63.5% 2008 2009 2010 1H Source: HMM Data 2008 2009 2010 1H Source: 2010 1H HMM Results 14
5. Dry Bulk 2Q BDI remained firm along with increase in raw material demand following global economic recovery. Strong BPI,BSI & Cost Restructuring led to improvement in the 2Q performance. Revenue Mix Spot vs. Fixed Capesize Panamax Suprmax Handy FIXED SPOT 10% 9% 5% 54% 39% 53% 75.2% 62.2% 67.4% 10% 19% 16% 27% 33% 27% 24.8% 37.8% 32.6% 2008 2009 2010 1H Source: HMM Data 2008 2009 2010 1H Source: 2010 1H HMM Results 15
6. Summary Financial Statements Balance Sheet Income Statement (2010. 6. 30) (Unit KRW Mn) (2010. 1.1 ~ 2010. 6. 30 ) (Unit KRW Mn) Classification i Amount Classification i Amount Total assets 8,576,127 Sales 3,796,800 Current assets 1,996,482 Cost of sales 3,555,081 (Cash & Cash equivalents) 882,228 Gross profit 241,719 Fixed assets 6,579,645 Operating profit 167,699 Total liabilities 6,434,893 Pre tax profit 91,544 Current liabilities 1,561,358 Net income 103,947 Long term liabilities 4,873,535 Total Stockholders' equity 2,141,234 Capital stock 765,366 Capital surplus 855,653 Retained earnings 305,915 Accumulated Other Comprehensive income 465,453 Debt to Equity 300.5% Net Debt to Equity 223.8% Net D/E =(Interest bearing debt Cash & Cash equivalents)/equity Capital Adjustments -251,153153 16
Investor Contact HMM Investor Relations Contact Sam Yoon +82 2 3706 5868 sangho.yoon@hmm21.com Ellie Jung +82 2 3706 58842 ellie.jung@hmm21.com Bex Jung +82 2 3706 5879 bex.jung@hmm21.com Suk Won Kang +82 2 3706 5872 sukwon.kang@hmm21.com