ir presentation february 2016...steel plate bulk part contract steel cutting keellaying launching...

IR Presentation February 2016

CONTENTS

Ⅱ. New order & Backlog

Ⅲ. Products & Market Situation

Ⅰ. Financial Highlights

Revenue & Operating Profit

Quarterly Earnings (recent 4Q)

Annual Earnings (past five years)

(KRWb)

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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

-

5.0

10.0

15.0

20.0

2011 2012 2013 2014 2015

Revenue(Shipbuilding&Offshore)

Revenue(Others)

OP margin

13.4 14.5

14.8

9.7

8.7 8.3

6.2

1.4

(KRWt) (%)

2015

1Q 2Q 3Q 4Q

Revenue 2,610 1,439 2,436 3,229

Operating Profit 26 -1,548 -10 30

OP Margin 1.0% Losses Losses 0.9%

Profit before income tax 33 -1,498 -34 37

Net Profit 11 -1,155 -25 -43

▶ 4Q 2015 earnings

▷ Revenue : KRW 0.8t increased vs. 3Q 2015

- Increase is due to stabilization of construction

process for large offshore projects and increased

construction progress for vessels

▷ Operating Profit : KRW 30b profit

- Prior to one-time expense is KRW 60b

∙ One-time expense is from the restructuring cost , KRW 30b

12.9

Financial Summary

Consolidated Statements of Income

(KRWb)

- 4 -

2011 2012 2013 2014 2015 1Q 2Q 3Q 4Q

Revenue 13,392 14,490 14,835 12,879 2,610 1,439 2,436 3,229 9,714

Operating Profit 1,160 1,206 914 183 26 -1,548 -10 30 -1,502

OP Margin 8.7% 8.3% 6.2% 1.4% 1.0% Losses Losses 0.9% Losses

Income Before Tax

1,150 1,045 819 190 33 -1,498 -34 37 -1,462

Net Profit 851 796 632 147 11 -1,155 -25 -43 -1,212

Financial Summary

Consolidated Statements of Financial Position

(KRWb)

- 5 -

2010 2011 2012 2013 2014 2015

Total Assets 18,850 16,414 16,635 17,427 17,122 17,302

Cash & Cash Equiv. 1,255 1,289 1,164 1,140 893 2,137

Inventories 607 540 699 842 1,169 1,449

Accounts Receivable 5,449 4,078 5,091 5,935 6,400 4,710

Advanced Payments 1,638 1,675 1,501 1,354 1,204 895

Hedge Related 3,370 2,592 2,064 2,035 1,113 1,225

Total Liabilities 14,718 11,770 11,352 11,581 11,549 13,036

Advanced Receipts 5,431 5,602 3,967 3,885 3,799 3,928

Interest Bearing Debt 2,838 1,784 3,193 2,937 3,827 5,033

Hedge Related 3,578 2,452 1,458 1,725 1,093 1,313

Total Equity 4,132 4,644 5,283 5,846 5,573 4,266

Paid in Capital 1,155 1,155 1,155 1,155 1,155 1,155

Treasury Stock -662 -659 -657 -656 -970 -970

Debt/Equity Ratio 356% 253% 215% 198% 207% 306%

Risk Management

Improvement on risk management before/after the contract signing

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Pre-contract At execution

Risk assessment before bid participation

Prospect Selection Committee (ITT review incl.)

Cost Review Committee (Quantity review incl.)

Risk Review Committee

Contract terms Review Committee

Bid Review Committee

Bidding

only for risk hedging available projects

Contract Signing

Intensive risk analysis

& mitigation planning

Risk Workshop

Continuous risk verification & assessment

Specific action plans set-up

+3 months

of contract

Regular

Process

ITT issue

Award winning

KPI management

Factors to drive cost increase and construction delay

Regular KPI check and feedback

Lessons Learned System

To prevent repetitive errors,

lessons learned and improvements we’re making for current projects are systematically

recorded and applied to future projects

* Invitation to tender

Risk Hedging Policy

SHI Focuses on minimizing profit volatility

Building Event

Time Gap (months) 12 5 3 10

Currency

Receivable

Payable

Raw Material

Main Engine

Machinery

Steel Plate

Bulk Part

Contract Steel Cutting Keel Laying Launching Delivery

: Hedging, Order : Execution, Delivery

Foreign currency exposure is fully covered through forward transaction at the stage of shipbuilding contract

Main engine and machinery are ordered within 1~2 months after contract signing

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CONTENTS




January 2016

Trend

(USDb)

- 9 -

Unit USDb

Containership - -

LNG Carrier - -

Tanker - -

Production Facility - -

Total - -

7.3

New Order

0

2

4

6

8

10

12

14

16

2012 2013 2014 2015 2016.Jan

10.0

0

9.6

13.3 0 Units

Order Backlog

January 2016

Trend

(USDb)

- 10 -

Unit USDb

Containership 23 3.2

LNG Carrier 21 4.4

Tanker 41 2.7

Drilling Rig 10 5.9

Production Facility 14 18.4

Others 6 0.7

Total 115 35.3

Others 2%

LNG Carrier

12%

Tanker

8%

Drilling Rig

17%

Production

Facility

52%

Containership 9%

0

5

10

15

20

25

30

35

40

45

2012 2013 2014 2015 2016.Jan

35.3 37.2 37.5

35.4 34.8

$35.3 billion (115 Units)

CONTENTS




New orders expected to pick up after 2H 2016 after heavy orders in 2015

- Continuous competition among alliance members for cost improvement and operation efficiency

- Expected sharp decrease in number of deliveries after year 2019

Supply & Demand Balance Global order trend & SHI market share

(Source: Clarksons, SHI assumption) (Source: SHI)

(unit) (,000TEU)

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(M/S)

Containership

10

62

51

120 22%

8%

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

'12 '13 '14 '15

Global Order (Over 10kTEU) SHI M/S

11 10

1,340 1,265

986

183

8.1%

4.0% 3.7%

0.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

200

400

600

800

1,000

1,200

1,400

1,600

'16(e) '17(e) '18(e) '19(e)

Delivery Fleet Growth Trade Growth

Trade growth to be stable above 6%

Short term demand is weak, but long term outlook is solid due to

stable LNG trade growth(CAGR 5%) and longer distances with US exports

LNG Carrier

Long term outlook of LNG trading & Fleets

= approximately 120 vessels needed

Global order trend & SHI market share

(Source: SHI)

(unit)

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(M/S)

(Source: Gaslog, BP, Earnst&Young, Wood Mackenzie Jan 2015 )

2014 trading : approx 240mtpa

Current fleet

: approx 430 ships

(1.8ships/1mtpa)

~2030 trading(e) : approx 500mtpa Fleet outlook

: approx 900 ships

(= 30 ships to be

ordered a year

in avg )

< World LNG trading outlook>

CAGR 5%

2014 main routes New supply ~2030

32

39

64

27

13%

36%

8%

11%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

10

20

30

40

50

60

70

'12 '13 '14 '15

Global Order SHI M/S

4

14

5 3

Limited demand for high specification drillship is expected

as downturn continues due to shrinking investments in exploration

Drillship

Next generation: 20K BOP drillship

New demand for 20K BOP drillship is expected

- For safe and efficient operation in high-pressure

and high-temperature deep water reservoirs

Global order trend & SHI market share

(Source: SHI)

(unit)

- 14 -

(M/S)

• BP-Maersk “Project 20K”

Jointly developing next generation drillship

using 20K BOP for Gulf of Mexico since

year 2013

* Drillship orders for the local content in Brazil included

(15 units in 2012 )

35

12

4

0

26%

42%

50%

0%

10%

20%

30%

40%

50%

60%

0

5

10

15

20

25

30

35

40

'12 '13 '14 '15

Global Order SHI M/S

9

5

2

Seeking both growth and profitability in offshore EPC market through

enhancement of EPC execution capability with ongoing projects

Production Facility

What we do for strengthening competitiveness Key projects under construction

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Ichthys CPF(Gas), Austrailia

Egina Oil FPSO, Nigeria

Lessons Learned Program

- Accumulating and systemizing knowledge learned from current projects to execute following better

Reinforcement of engineering capacity

- New R&D center established only for FEED, FEED verification, detailed design etc.

- Recruiting experienced engineers and project managers

Organizational improvement

- Risk management team and offshore package procurement team established

SHI’s new growth engine

- Market to expand due to its cost benefit and environmental advantage

FLNG

Concept & Advantage

Production, treatment, liquefaction and offloading

of natural gas to be carried out on a vessel

- No need for extensive pipe lines and onshore

processing facilities

Less CAPEX required

Natural Gas

Pretreatment

Liquefaction

FLNG projects under consideration

Number Projects

Under construction

3 Prelude(Shell)

Kanowit, Rotan (Petronas)

Active 4 Browse1,2,3(Shell)

Mozmbique(ENI), etc.

Potential 31 Scarborough, Sunrise, etc.

Total 38

(Source: Clarkson World Offshore Register )

3 Projects will be complete during year '15~'18

4 Projects are actively under review process

- 16 -

SHI leads the market with long experiences and solid relationship with its

strategic partners

FLNG

Long term relationship with the leading companies

(Source: SHI, Shell)

Prelude Browse

Region Austrailia Austrailia

LNG Capacity 3.5mpta 12.0mtpa

Contract amount 6 USDb under negotiation

FID 2011 2016

Delivery 2016 2021~2023

Major big projects are underway based on long term agreement with Royal Dutch Shell and Technip

that are leaders of FLNG market.

FEED & EPC contract for Browse project made in June 2015

- EPC contract amount ($4.7b) includes hulls of three FLNGs

and top side price will be added when the FEED is complete.

- 17 -

* To commence with NTP issuance in 2016

Appendix- Global Network

Oslo

London

Athens Tokyo

Dubai

Rongcheng

Ningbo

Singapore

Houston

Kuala Lumpur

Houston

Deli

Rio De Janeiro

Lagos

Shipyard Block Factory Engineering Center Branch Office

Global production and engineering bases enable SHI to meet various needs of customers

Block Factories in China (2) Ningbo (Since 1997) , Rongcheng (Since 2007)

Offshore Engineering Centers (2) Houston [ASOG (J/V with AMEC)], Deli (Noida)

Branch Office (10) London, Oslo, Athens, Lagos, Dubai, Kuala Lumpur, Singapore, Tokyo, Huston, Rio De Janeiro

Geoje Shipyard

- 18 -

Appendix- Shipyard View

Site : 4.0million ㎡

Quay Wall Length : 7.9Km (24 vessels)

3 Floating Cranes : 3,000 / 3,600 / 8,000ton

8 Docks (3 Dry Docks & 5 Floating Docks) ▪ No. 1 : 283m × 46m ▪ NO. 2 : 390m × 65m ▪ No. 3 : 640m × 98m ▪ G1 : 270m × 52m ▪ G2 : 400m × 55m ▪ G3 : 400m × 70m ▪ G4 : 420m × 70m ▪ G5 : 157m × 131m (only for Offshore)

SHI Focuses on minimizing profit volatility

Offshore Facilities

Dry Dock No.2

Floating Dock 3

Dry Dock No.3

Floating Dock 2

Floating Dock 4

Main Building

Dry Dock No. 1

ShinHanne Factory

Floating Dock 1

Floating Dock 5

- 19 -

Disclaimer

This presentation has been prepared by Samsung Heavy Industries Co., Ltd. and contains forward-looking

statements that are subject to risks, uncertainties, and assumptions.

The presentation is solely for your information, subject to change without notice, and makes no

representation or 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.

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ir presentation february 2016...steel plate bulk part contract steel cutting keellaying launching...

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