LG International. Investor Presentation

Transcription

1 LG International Investor Presentation

2 Table of Contents Overview & Strategy 2 Resources Business 5 Infra & Industrial Business 10 Logistics Business 13 Financial Highlights 14 Disclaimer The company has adopted its financial statements under Korean International Financial Reporting Standards (K-IFRS). Forecasts and projections contained in this material are based on current business environment and management strategies, and they may differ from the actual results upon changes and unaccounted variables

3 Overview & Strategy

4 Overview Comprised of Resources, Infra & Industrial and Logistics Coal Oil & Gas Invest/Develop oil/gas fields Block 8 in Oman, ADA in Kazakhstan, GeoPark Chile/Colombia, Block 11-2 in Vietnam, Ras Laffan LNG in Qatar, etc. Metals Resources Invest/Develop/Operate coal mines MPP/GAM in Indonesia, Wantugou in China, Ensham in Australia, etc. Off-take and trading Indonesia/China/Australia/Russia produced coal Domestic/overseas power generators, cement producers, etc. Invest/Develop/Operate non-ferrous metal mines Rosemont in the USA, etc. Off-take and trading Import/sales and trilateral trade of metals(copper, aluminum, steel, etc.), raw materials(copper/zinc concentrate, etc.) Invest/Operate coil centers Chemicals & Project Infra & Industrial Develop chemical plant/infra structure project Perform as EPC contractor Invest in coal/oil/gas-based chemical plant and obtain off-take rights Petrochemicals product trading -PP/PE, PET, Methanol. Urea fertilizer, etc. Power Project & Infra Invest/Develop Independent Power Producers( IPP ) IT IT/Display components/equipment trading - LCD panel, ODD, mobile phone components, etc. Vendor Management Inventory services: financing, logistics and inventory management, etc. Life Commodities Invest/Develop/Operate palm oil plantation PT.PAM in Indonesia, etc. Off-take and other commodities trading Export/trilateral trade of CPO and other agricultural products Logistics Auto & Aviation Provide engineering solution for vehicle, manufacturing and powertrain Automotive/elevator-related equipment/parts trading Helicopter repair Own 51% stake in Pantos Logistics( Pantos ) Integrated Logistics Service Provider: Sea Freight, Air Freight, Customs Clearance, Warehousing, Logistics consulting, etc. Pantos owns 100% stake in Hi Logistics - 2 -

5 Track Record On-going revenue stream diversification Resources Infra & Industrial Logistics Production in Ensham coal mine in Australia(1993) Investment in Block 8(West Bukha) oil field in Oman(2004) Production in Ras Laffan LNG gas field in Qatar(1999) Initial E&P Investment (~ 2007) Investment in MPP coal mine in Indonesia(2007) Production in Block 11-2 gas field in Vietnam(2006) Started import/distribution business(2003) - Digital Camera/Wine/Commercial Vehicles, etc. Production in RapuRapu copper mine in Philippines(2008) Investment in Wantugou coal mine in China(2008) Production in MPP coal mine in Indonesia(2009) Production in Block 8(West Bukha) oil field in Oman(2009) Investment in Palm Oil Plantation(2009) E&P Portfolio Construction (2008 ~ 2011) Order received for Aromatics plant in Oman(2006) Investment in coil center(2007) Order received for gas desulfurization plant in Turkmenistan(2009) Production in Wantugou coal mine in China(2011) Investment in GeoPark Chile(2011) Investment in IT component/materials(2011) Exit from Commercial Vehicles distribution business (2011) Investment in GAM coal mine in Indonesia(2012) Investment in GeoPark Colombia(2012) Production in ADA oil field in Kazakhstan(2013) Investment in GS E&R(2014) Production expected in GAM coal mine in Indonesia(2016) Production expected in Rosemont copper mine in the USA(TBD) Revenue Stream Diversification: Project and Logistics Business(2012 ~) Investment in Coal to chemical plant in China(2013) Exit from Digital Camera/Wine distribution business(2012) Order received for oil refinery plant in Turkmenistan(2012) Order received for Ethan Cracker plant in Turkmenistan(2014) Acquisition of Pantos Logistics(2015) Pantos acquired 100% stake of Hi Logistics(2015) - 3 -

6 Strategic Direction Interdependent three core axis of our business: Trading, E&P, Project continuously interact to generate business opportunities. Addition of logistics business will become a strong catalyst for improving efficiency and bolstering growth E&P Coal Oil & Gas Non-ferrous Metals Palm Oil Provides sales channel Improves capability to navigate through market disruptions Intelligence through established network Off-take enhances sourcing capability Larger customer pool Better price bargaining power Trading Consumes natural resources Value chain expansion to downstream Established relationship with Governments/Enterprises/Financial institutions Off-take enhances sourcing capability Consumes raw materials and equipment Raw materials sourcing capability improves profitability and bargaining power Established relationship with Governments/Enterprises/Financial institutions Raw materials and equipment Provides sales channel Intelligence through established network Project Project Organizing/ Development IPP/Infrastructure Investment Strengthen capability in Dry/Liquid bulk logistics Logistics Improved service in Customs clearance, Warehousing, Distribution, etc. Diversify customer base leveraging bargaining power Expand Project logistics - 4 -

7 Resources Business

8 Coal / Oil & Gas Coal LGI Share/Off-take & Trading Volume (Million ton) 10 LGI share/off-take Trading (Million BOE) 8 Oil & Gas Production Volume: LGI Share '09A '10A '11A '12A '13A '14A '15E 0 '09A '10A '11A '12A '13A '14A '15E Asset Portfolio Asset Portfolio Exploration Under Consideration Exploration Production Development Production Development Under Consideration GAM in Indonesia MPP in Indonesia Wantugou in China Ensham in Australia Investment in Indonesia, China, etc. IPP, distribution, etc. Block 8 in Oman ADA in Kazakhstan Ras Laffan LNG in Qatar Block 11-2 in Vietnam GeoPark Chile/ Colombia Investment in North/South America, Middle East, etc. Productivity and operational efficiency improvement of the existing mines - On-going cost base improvement - Development of the GAM in Indonesia Downstream investment: IPP, distribution, infrastructure, etc. - Increase trading volume Investment in production assets with superior cost base in strategic focus regions such as Indonesia, China, etc. Own stakes in 6 production stage oil/gas fields in strategically targeted regions: Middle East, Central Asia, and South America Increase production volume and secure additional reserves from existing investments: Block 8 in Oman, ADA in Kazakhstan, GeoPark Chile/Colombia, etc. Joint investment in North/South America, Middle East development/production stage assets with potential reserve increase together with existing partners - 5 -

9 Metals / Life Commodities Metals Trading Volume Life Commodities Trading Volume ( 000 ton) 3,000 Steel Aluminum ( 000 ton) 80 CPO Electrolytic copper 1, '09A '10A '11A '12A '13A '14A '15E 0 '12A '13A '14A '15E Asset Portfolio Asset Portfolio Exploration Under Consideration Exploration Production Development Production Development Under Consideration Rosemont in the USA (Electrolytic Copper) Investment in development/ production stage asset Palm Oil Plantation in Indonesia Investment in additional Palm Oil Plantation Increase copper concentrate/raw materials trading volume by diversifying client base Obtain off-take rights by expediting development of the Rosemont in the USA and acquiring additional development/production stage copper mines Own stakes in 6 coil centers in overseas Expand scale of the business by Increasing production volume from the existing plantation Acquiring additional plantation Business with less volatility and long-term growth projection - 6 -

10 Key Assets: Coal Production Development Exploration MPP (Indonesia) Wantugou (China) Ensham (Australia) GAM (Indonesia) Location East Kalimantan Inner Mongolia Queensland East Kalimantan Ownership/ Profit Recognition 75% / Consolidated Income 30% / Equity Method 15% / Consolidated Income 60% / Consolidated Income Investment/ Production 2007 / / / / 2016 (E) Features Operator Off-take 100% First Chinese mine to be owned by a Korean corporation Open-pit mining Underground mining Operator Off-take 100% 6 th largest in Indonesia Remaining Minable Reserves 12 million ton (Thermal Coal) 150 million ton (Thermal Coal) 100 million ton (Thermal Coal) 176 million ton (Thermal Coal) - 7 -

11 Key Assets: Oil & Gas Production Development Exploration Block 8 (Oman) Block 11-2 (Vietnam) Ras Laffan LNG (Qatar) ADA (Kazakhstan) GeoPark Chile GeoPark Colombia Location Musandam Peninsula (Offshore) South Vung Tau (Offshore) North (Offshore) Northwest Aktobe (Onshore) Magellan Basin (Onshore) Central Llanos (Onshore) Ownership/ Profit Recognition 30% (Bukha), 50% (W.Bukha) / Net Revenue % / Net Revenue 0.28% / Dividend 35% / Equity Method 20% / Equity Method 20% / Equity Method Investment/ Production 1997 / 1994 (Bukha) 2004 / 2009 (W. Bukha) 1992 / / / / / 1999 Features First offshore oil field in Oman Long-term supply contract with the state owned corporation in Vietnam Ownership increase in 2014(11.25% %) One of the 3 largest gas fields Korean corporation s first success from exploration production in Central Asia Korean corporation s first oil/gas field investment in Chile 1 in production, 5 in exploration 4 in production, 5 in exploration Remaining Minable Reserves 15 million BOE (Oil + Gas) 64 million BOE (Oil + Gas) 852 million BOE (Oil + Gas) 25 million BOE (Oil) 46 million BOE (Oil + Gas) 46 million BOE (Oil) - 8 -

12 Key Assets: Metals & Life Commodities Production Development Exploration Rosemont (USA) PT.PAM (Indonesia) Location Arizona West Kalimantan, Indonesia Ownership/ Profit Recognition 10% / Equity method 95% / Consolidated Income Investment/ Production 2010 / TBD 2009 / 2012 Features 3 rd largest in the USA / 15 th largest in the world On-going production volume increase and cost reduction CPO Mill production started in Oct Remaining Minable Reserves / Plantable Area TBD 10,500 ha - 9 -

13 Infra & Industrial Business

14 Project Business Secure sustainable profit and off-take rights by working as EPC contractor, Infrastructure/IPP developer and selective equity investor Chemical Plant Infrastructure IPP Business Receive orders for Chemical Plant as an EPC contractor and forming consortium with construction companies Infrastructure project development IPP projects development Role Project development Equity investment EPC Contractor Financing Project development EPC Contractor Equity investment Project development Equity investment Obtain operational capability Features Lasting revenue stream until the completion of the construction Secure off-take rights after the completion Infrastructure project development and equity investment in developing countries Secure sustainable profit through equity participation Provide coal/oil/gas, etc. Examples Gas treatment Oil refinery Ethane cracker Petrochemical plant, etc. Industrial Plant Port facilities Road/Railway, etc. Hydroelectric power Gas power Coal power Biomass power, etc

15 Key EPC Projects In Progress Completed Petronas Gas Treatment Size: U$ 240 million Period: Jun 2013~Apr 2016 Features: Gas treatment facility and terminal expansion/ reconstruction Turkmenistan Oman Aromatics Size: U$ 1.3 billion Period: Jul 2006~Aug 2009 Features: Construct the facilities that produces Benzene, Toluene, Xylene, etc. out of Naphtha Financing LGI-GS E&C consortium Ethan Cracker Oil Refinery Complex Modernization Desulfurization Polypropylene Size: U$ 3.4 billion Period: Jul 2014~May 2018 Features: Natural gas based Ethane Cracker to produce Polyethylene and Polypropylene MOU signed for Off-take LGI-HEC 1) -TYO 2) consortium Size: U$ 530 million Period: Jul 2012~1H 2016(E) Features: Modernization of the oil processing complex that produces Gasoline, Diesel, etc. LGI-HEC 1) consortium Size: U$ 1.5 billion Period: Sep 2012~Jan 2013 Features: Gas desulfurization plant Off-take agreement signed LGI-HEC 1) consortium Size: U$ 180 million Period: May 2004~Sep 2006 Features: Gas based Propylene polymerization to produce Polypropylene Financing Off-take started from 2007 LGI-GS E&C consortium 1) HEC: Hyundai Engineering 2) TYO: Toyo Engineering

16 Adding value to improve profitability Few examples of how we transform our trading business to enhance profitability Chemical Plant Vendor Management Inventory LGI Equity Investment JIT HUB Customs Coal/Oil/Gas Chemical Plant Buyer Production Process Carry Shipping Transit Storage -in Carry -out Delivery Raw Materials Off-take Overview Strategy Secure off-take rights by making equity investment and working as EPC contractor Superior cost structure achievable by leveraging coal/oil/gas sourcing capability EPC contractor for Oman Polypropylene Plant - Off-take trading started from 2007 Coal to chemical plant investment in Inner Mongolia, China - Commercial production started in Jul 2014 More off-take rights to be obtained as an effort to increase trading volume By locating global VMI bases adjacent to the Buyers, VMI provides additional value to various steps of the transactions that take place between the Vendors and the Buyers: Financing, Inventory management, Logistics, etc. 66 JITs and 6 HUBs are currently in operation globally including Korea Expected synergy with Pantos Logistics in areas of customs clearance, warehousing, distribution, etc

17 Logistics Business

18 Pantos Logistics Company Overview Main Business: Integrated Logistics Service Provider Sea Freight, Air Freight, Road & Rail Freight, International Express, Customs Clearance, Warehousing, Logistics Consulting, etc. Number of employees: 6,058 (as of 2015) Global Networks: 446 networks in 41 countries worldwide Main customers: Maersk, Hyundai Merchant Marine, Hanjin Shipping, CMA CGM, etc. Composition of Sales (as of 2015) By Business Areas By Regions Sea freight 61% Others 3% W&D 15% Air freight 21% America Europe 6% 8% Asia 36% Korea 51% Summary Financial Position (KRW Bn) 3) Items Total Assets Current Assets Cash Trade Receivables Inventories Non-Current Assets Investments Assets Tangible/Intangible Assets Total Liabilities Total Liabilities /Shareholder s Equity (%) (159%) (123%) (130%) Trade Payables Borrowings Interest Bearing Liabilities /Shareholder s Equity (%) (41%) (20%) (24%) Total Capital Capital stock One of the global leaders in Sea/Air freight forwarding Global top 5 by sea freight volume: 1,753,547 TEU 1) Global top 20/Asia top 6 by air freight volume : 224,865 ton 1) Strong bargaining power based on large and consistent volume 1 st in Korea and 22 nd globally among Sea/Air freight forwarders 2) Global reach and coverage with extensive logistics network Coverage in wide variety of industries : Electronics, Chemical, Construction, Oil refining, Distribution, etc. Provides high-end IT solution for customized logistics information and supply chain visibility service Provides integrated logistics solution including logistics consulting, warehousing, customs clearance services Pantos owns 100% stake in Hi Logistics Operates import/export bonded warehouse, distribution center, hub warehouse, etc. Summary Income Statement (KRW Bn) 3) Items Sales 2, , ,188.7 Gross Profit On Sales Gross profit on sales rate (%) 10.9% 12.8% 13.2% Operating Income Operating income rate (%) 2.9% 3.5% 3.5% Non-Operating Income Finance Income/Expenses Gain(loss) on valuation of equity-method investments Other Income and Expenses Net income before income tax expenses Net income before income tax expenses rate (%) 3.2% 4.0% 6.0% Net Income Net Income rate (%) 2.4% 3.2% 4.9% 1) Armstrong & Associates, Top 25 Global Freight Forwarder (Ranking by volume) 2) Armstrong & Associates, Top 25 Global Freight Forwarder (Ranking by sales) 3) 2013: K-GAAP Consolidated, 2014~2015: K-IFRS Consolidated / Hi Logistics consolidated from Nov

19 Financial Highlights

20 Financial Highlights Financial Ratio Total Liabilities/ Shareholder s Equity % 249% 207% 202% 213% Interest Bearing Liabilities/ Shareholder s Equity 131% 96% 107% 99% 114% Net Interest Bearing Liabilities/ Shareholder s Equity 94% 51% 72% 65% 76% Liabilities 1. Net Interest Bearing Liabilities (Unit: KRW Bn) 2. Breakdown of Interest Bearing Liabilities (Unit: KRW Bn) Interest Bearing Liabilities 1, Others Corporate Bonds Cash & Cash equivalents , Foreign Currency Long-term Borrowings (Government policy funds: 81%) Net Interest Bearing Liabilities 1, Trade Finance * As of Dec 2015 * As of Dec

21 Ownership Structure/Dividend Ownership Structure Number of Shares Major Shareholders and Related Parties Domestic Institutional Investors Foreign Investors 28% 28% 28% 29% 33% 36% 8% 8% 10% 35% 31% 26% Individuals and Others (Unit : 000 shares) Division # of Shares Issued Shares 38,760 Treasury Shares 101 Outstanding Shares 38,659 * As of 31 Dec 2015 Dividend Division Dividend per share (KRW) Net Income (KRW Bn) Total dividend amount (KRW Bn) Dividend payout ratio (%) n/a n/a 26.3 Dividend yield (%) * Net Income: Based on K-IFRS consolidated statements

22 Financial Position (K-IFRS Consolidated) Items (Unit : KRW Bn) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Assets 4, , , , , , , ,383.5 Current Assets 2, , , , , , , ,074.1 Cash & Cash Equivalents Trade Receivables 1, , , , , , , ,431.7 Inventories , , , , , , Other Current Assets Non-Current Assets 2, , , , , , , ,309.3 Investments Tangible Assets Intangible Assets , Other Non-Current Assets Liabilities 3, , , , , , , ,840.2 Current Liabilities 2, , , , , , , ,589.1 Short-term Borrowings Trade Payables 1, , , , , , , ,549.6 Current Portion of Bonds and Long-Term Borrowings Other Current Liabilities Non-Current Liabilities , , , ,251.1 Bonds Payables Long-term Borrowings Other Non-Current Liabilities Equity 1, , , , , , , ,

23 Income Statement (K-IFRS Consolidated) (Unit : KRW Bn) Items Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Sales 2, , , , , , , , , ,224.5 Cost of Sales 2, , , , , , , , , ,710.7 Gross Profit SG&A Expenses Operating Profit Non-Operating Profit 9.9 (96.9) (31.7) (40.6) (159.3) 2.2 (1.6) (18.3) (279.2) (296.9) Finance Income/Costs (4.9) (6.3) (16.4) (17.5) (45.1) (7.3) (10.6) (18.5) (10.6) (47.0) Gain(loss) of Equity Method Other Income and Expenses (5.2) (6.2) (8.0) (3.5) (2.0) (12.2) (203.4) (221.1) 12.8 (92.0) (10.1) (16.9) (106.2) (65.2) (28.8) Profit Before Tax 33.5 (29.8) (278.6) (215.2) Income Tax (41.4) 1.9 Net Income 19.4 (31.1) (2.3) 0.1 (13.8) (237.2) (217.1) Attributable to LGI Corp (31.1) (2.1) 1.2 (13.2) 12.1 (0.4) (6.8) (240.4) (235.4) Non-Controlling Interests (0.2) (1.1) (0.6)