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Samsung Heavy Industries

Nov 2011 MOJAH 266K LNG Carrier (332m 54m 27m)

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Contents

Company OverviewGlobal Markets

Future Strategy

Stena Drillmax (219m 42m 19)

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3

Business Highlights

Order & Backlog

Risk Management

Financial Results

Construction Business

LNG Carrier (302m

50m

27m) & LNG FPSO(336m

50m

32m)

Company Overview

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Revenue & OP margin(KRWt) (%)

4

Business Highlights

Revenue of 2010

Offshore51%Commercial

Vessels 41%

Construction 8%

(KRWt)

Backlog as of Oct 31, 2011

Construction division excluded

Offshore54%

CommercialVessels 46%

(US$b)

EPS and DPS

(KRW) (KRW)

6752178

2899 2900

3848250

500 500 500 500

-

200

400

600

0

1000

2000

3000

4000

5000

2006 2007 2008 2009 2010

Earnings per share Dividend

1.6

4.7

7.16.1

7.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.08.0

0

5

10

15

20

2006 2007 2008 2009 2010

OffshoreShipConstructionOP margin

6.48.5

10.613.1 13.1

EPS DPS

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2006 2007 2008 2009 2010 2011.Oct

OffshoreCommercial Vessels

2006 2007 2008 2009 2010 2011.July

RigsProductionLNGCContainerTankerOthers(Ferry, WTI)

5

Order & Backlog

(US$b)

Order backlog

New orders Details

As of Oct 31, 2011

Containerships(22%)

14.915.313.5

21.2

1.4

(US$b)

New orders

9.7

$14.9 Bil (50 Units)

Drillships(38%)

LNG Carriers(24%)

Production Facilities(22%)

Tankers(4%)

WTI(2%)

Containerships(10%)

Order backlog Trend(US$b)

26.3

42.1

48.7

41.139.340.7Drillships(31%)

Production Facilities(23%)

LNG Carriers(12%)

Tankers

(12%)

2011.Oct

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Risk Management

6

Building Event

Time Gap (months) 20 4.5 2.5 3.0

Currency

Receivables

PayablesRaw Materials

Main Engine

Machinery

Steel Plate

Bulk Parts

SHI focuses on minimizing profit volatility

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 of contract signing

No Hedge tools available for Steel plates, SHI put buffer in bidding price to cope with unexpected price hike

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Financial Results

(KRWb)Income statement

2009 2010 20111Q 2Q 3Q Yearly 1Q 2Q 3Q Total

Sales 13,095 3,330 3,035 3,146 13,053 3,500 3,153 3,407 10,060

ShipbuildingConstruction

12,261

834

3,144

186

2,790

245

-

-

12,073

980

3,253

247

2,920

233

-

-

-

-

Operating Profit(Margin)

794(6.1%)

216(6.5%)

260(8.6%)

264(8.4%)

997(7.6%)

379(10.8%)

324(10.3%)

217(6.4%)

920(9.1%)

Pre-tax income 855 256 281 281 1,149 377 349 204 930

Non-OP incomeNon-OP expense

6,2226,161

1,7951,755

940919

--

3,7733,621

3638

316

--

--

Net income 670 200 230 258 888 291 266 132 689

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Balance sheet

8

(KRWb)

Financial Results

2008 2009 2010(A) 2011.2Q(B) B-ATotal Assets 26,084 20,188 18,440 16,477 -1,963

Cash & equiv. Account receivable Advance payments

Hedge relatedInventories

2,4901,9992,880

12,796778

1,0853,8142,405

6,916579

1,2265,4441,663

3,370600

1,4494,4631,499

2,326671

223-981-164

-1,04471

Total Liabilities 23,760 17,347 14,343 11,936 -2,407

Advance receiptDebtsHedge related

8,632158

12,518

5,6582,7806,817

5,3292,2213,578

5,9131,4582,319

584-763

-1,259

Total Equity 2,324 2,841 4,097 4,541 444

Paid in capitalTreasury shares

1,154-674

1,154-671

1,154-662

1,154-661

-1

Total Liab. & Eqty 26,084 20,188 18,440 16,477 -1,963

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Business overview Main projects

As of Oct 31, 2011

Revenue and profit

Order backlog

Tril KRW

Building & Housing70%

Civil & Plant30%

Road Apartment

Office building

HotelTownhouse

0%

2%

4%

6%

8%

10%

-

200

400

600

800

1,000

2006 2007 2008 2009 2010

Revenue Operating Profit

(KRWb)

Incineration plant

Museum

Construction Business

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Global New Orders

Major Market Situation

- Commercial Vessels Market

- Offshore Market

Major products of SHI : Containership, LNG Carrier, Drillship and FPSO (clockwise from upper left)

Global Markets

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-

20

40

60

80

100

120

140

160

180

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11.Oct

LNG CarrierContainershipTankerBulkerOther

11

(Mn. GT)

4635

77 7469

116

177

111

30

AVG : 36

30 31

AVG : 73

AVG : 135

Increase of Sea trade volume together with chinese effect had lead shipbuilding orders for 2003~2008

After sharp decrease in 2009, new orders has been normalized to the level of 2003~2005

The orders of specialized vessels such as Drillship, LNGC and oversized Containership are increasing

76

43

Historical Orders by Shiptype and Countries

Korea

China

Japan

Global New Orders

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Fleet vs backlogFreight index

Source: Clarkson, as of Oct, 2011

Fleet(A)

OldFleet(20yrs)

Backlog(B) B/A

Bulk Carriers 310 78 126 41%

Tankers 259 23 52 20%

Source: Clarkson, as of Oct, 2011

(Mn. G/T)

Order trends and M/S by country

11,459

2,018

08/1/2 08/9/2 09/5/2 10/1/2 10/9/2

120

51

B D I

W S

19%

49%

24%8%

Korea ChinaJapan Others

(Mn. G/T)

[Bulk Carriers]

(Mn. G/T)

[Tankers]

51%29%

12% 8%

Korea ChinaJapan Others

136

177 165 151 146

0

20

40

60

80

100

020406080

100120140160180200

'07 '08 '09 '10 '11(E)

BacklogDeliveryNew order

93 100

7868 64

0

20

40

60

80

100

020406080

100120140160180

200

'07 '08 '09 '10 '11(E)

BacklogDeliveryNew order

Bulk Carriers & Tankers :

11/10/28

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Normal Slow steam

Speed(knots) 23 18.5

Voyage DaysCharter cost(A)

561.7

702.1

Fuel consumption(Ton/day)Fuel cost(B)

2005.1

1053.6

Total cost (A+B) 6.8 5.7(-16%)

CO2(th. Ton.) 24.4 17.4(-29%)

Cost comparison by speed

* 6,000TEU, Bunker-C: 650$/T, Charter Cost: $30,000/day

Fuel & charter cost($/Ton)

Cost Saving by Big-Sized vessel

Source: Drewry, Daesin Securities, 80% operation basis

(%) 8,000TEU 12,000TEU

Fuel Consumption/Day 230Ton 260Ton

Fuel Cost/Day $150,000 $169,000

Annual Cost (a) $43.2mil $48.7mil

Fixed Cost (b)(Capital Cost)

$23.6mil($11.5mil)

$32.8mil($16.5mil)

Total Cost/year(a+b) $66.8mil $81.5mil

Cost/TEU $8,350 $6,791

Comparison - 18%

Source: Clarkson, KMI

Containerships :

New Order & Delivery

Source: Clarkson, as of Oct 2011

(mil.GT)

1,406

596

720 645

0

200

400

600

800

0

400

800

1,200

1,600

'07.1 '07.7 '08.1 '08.7 '09.1 '09.7 '10.1 '10.7 '11.1 '11.10

HRCIBunker-C

($/Ton)

1311 11

104

-9

12

8

-15

-10

-5

0

5

10

15

0

5

10

15

20

2530

35

40

'04 '05 '06 '07 '08 '09 '10 '11(E)

New OrderDeliveryTrade Growth

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50

70

90

110

130

150

170

190

Korea Japan China

171

52 554 3 5

Delivery Backlog

LNG Demand & LNGC Fleet Forecast

14

Energy Consumption & LNG Trading

Source: BP

(MTOE)

-

2,000

4,000

6,000

8,000

10,000

12,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09

Oil (35%)

Natural Gas (24%)

Coal (29%)

Hydro(7%)

Nuclear (5%)

2.2 Bil.Ton(consumption)

Pipeline470(72%) Trading

650

(Mil.Ton , 09)

LNG180(28%)

Source: BP, Andy Flower

Economical

Eco-Friendly

LNGC Global M/S

(units)

87%

5% 8%

Source: SHI, 2000~2011.Oct

LNG Carriers

100 110 130 154165

221 248279

316

359

410

128139

176223

299363

429495

574

662

749

0

100

200

300

400

500

600

700

800

-50

100150200250300350

400450

'00 '02 '04 '06 '08 '10 '12F '14F '16F '18F '20F

LNG Demand

LNGC Fleet

Mil.ton (units)

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LNG Production & Supply Chain

Production

Facilities

Liquifaction

FacilitiesLNG Carrier Storage &

RegasficationGas FieldLNG FSRU

LNG RV

End

User

LNGC

LNG FPSO

LNG Derivatives :

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LNG FPSO

Supply Plan 10 vessels for 15 years(5 Bil $/ vessel)

Target Field Australian northwest area

Capacity 3.5 mtpa

Storage 450k cbm

Progress Status 1 st Vessel Contracted

Why LNG FPSO?

Capex Forecast for FLNG

Source: FlexLNG

Natural gas

Pre-treatment

Liquefaction

Shell LNG FPSO Project

LNGFPSO

Less Capex[25%]

Mobility[cover more reserves]

Traditionalonland plant

+

0

3

6

9

1215

18

21

'10 '11(E) '12(E) '13(E) '14(E) '15(E) '16(E) '17(E) '18(E) '19(E) '20(E)

(US$b)

LNG FPSO Market

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Offshore Market

Supply Increase in Deep Water

Source: Energyfiles1930 1950 1972 1993 2007 2014 2030

Global Oil Supply 1930~2030(mil barrels oil/d)

Conventional Onshore

Deep Water

Shallow Water

Oil Sands

00 10 25(E) 2% 8.5% 13%

Deep Water Development Regions

0

5

10

15

20

25

30

35

2000 2005 2010 2015F 2020F 2025F 2030F

shallow water(mil. barrels oil/d) (mil. barrels oil/d)

Shallow water

Deep water

16

14

12

10

8

6

4

20

17

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F

(US$b)

Global Deep Water Capex

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Korea Singapore China Others

DrillshipSemi SubJack-up

18

Jack-ups

Drillship

Semi-submersible

Rig Types

D e e p W a t e r

S h a l l o wW

a t e r

Order History & M/S by country

Jack-ups21%

Drillships46%

Semi-sub33%

2005~2011.4, Floating rig, value based (source : RS Platou, SHI)

(52%) (30%) (7%)(11%)

90.0US$bOrders

Deep Water Rig orders

Drilling Rig

29

1519

26

31

10

1912

10

1

3

4

0

5

10

15

20

2530

35

40

'05 '06 '07 '08 '09 '10 '11.Oct

semi-sub

drillship

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Korea Singapore China Japan Others

Barge TLP

Semi FPSO

19

F.P.U

F.P.S.O

Fixed Platform

Facility Types

D e e p W

a t e r

S h a l l o wW

a t e r

FPSO 66%Semi 16%

TLP 13%

Barge 5%

1996~2011.4, Floating Facilities, number based (Source : IMA, Clarkson)

130UnitOrder

(44%) (28%)(2%)(14%) (12%)

Order History & M/S by country

Order forecast for Deep Water Facilities

2011(F) 2012(F) 2013(F) 2014(F) 2015(F)

New Demand 12 15 17 5 5

Replacement - - 5 10 15

Total 12 15 22 15 20

Order Forcast(*) 6 8 11 8 10

Amount(mil $) 6,600 8,250 12,100 8,250 11,000

Source: BP, Energyfiles, *: New Construction 50%, Conversion 50%

(unit)

Production Facility

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Technological Leadership

Green Future

Competitiveness

Globalization Strategy

Sakhalin fixed platform built by SHI

Future Strategy

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Growing environmental awareness creating eco-friendly product markets

Innovative technology and shrinking oil reserves are triggering new Arctic oil production era

Increasing demand for new products provides SHI with new business opportunities

LNG FSRU

Ice DrillshipIcebreaking Tanker Ice Container

LNG FPSO CRUISE

Technological Leadership

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Emission

Tanker(115K) 1.4

LNGC (266K) 3.0

CONT(13,800TEU) 6.2

0

1,000

2,000

3,000

4,000

5,000

6,000

7,0008,000

2000 2010 2020 2030 2040 2050

CO2 Emission Reduction Target (EEDI)

22

CO2 Emission from Ships

Phase 0(2013~14)

Phase 1(2015~19)

Phase 2(2020~24)

Phase 3(2025~)

IMO 0% 10% 20% 30%

SHI 30% 40% - -

SHIs Eco-Friendly vessels are already designed toreduce up to 20%

IMO EEDI Regulation Concept

Source: MEPC 62th Meeting, Company data

07: 847

(Mil Ton)

Source : IMO MEPC 58/INF.6

20: 1,500

50: 7,200

(Mil Ton)

EEDI Baseline

Operation Allowed

OperationNot Allowed

Vessel Size(DWT or GRT)

C O 2 E m

i s s i o n

b y g

/ t o n m

i l e

GradualReinforcement

Rules & Regulation by IMO MEPC

Energy Efficiency Design Index for New Ships

Technical(EEDI)

Energy Efficiency Operational Index for All Ships

Operational(EEOI)

Emission Trading Scheme, GHG Fund, Carbon TaxMarket Based

* Effective from 2013

Green Future

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High Oil Price(Bunker)

co2 EmissionRegulation

23

Source: Clarksons

- Development of Required EEDI- EEOI

- GHG Fund, ETS, Carbon Tax

- 1990~2000 avg: $90/ton- Current price at 645$

Paradigm Change

Fuel Saving of shipsNeed for

In Technology

Fuel Efficiency becomes Everything

In Operation

Higher Fuel EfficiencyShip Design &

Structure

Propeller TechnologyEnergy Saving Device

PropellerTechnology

Rudder Bulb Saver Fin

Green Future

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ShipbuildingCluster

EngineeringPower

Global EcoTrends

Korean

Steel9%

Source: Clarkson

Global New Order in 2011(US$b)

24

Competitors Situation Korean Exclusive Position

Source: The bank of Korea, National bureau of Statistics of China

(USD/month/person)

-500

1,0001,5002,0002,5003,0003,5004,000

4,5005,000

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Korea(USD)China(USD)

- Synergy Effect- Strong Supply-Chain

- Long Experience- Preoccupancy

Dominent in Hig h-End Vessels marketLabor Cost Comparison

Require much time to catch up technologically

Shipbuilding Market shifts to Offshore

Shipyard Restructuring, Lower Profitabiliy

Oversupply of Low-end Vessels

Steep Increase of Labor Cost & Currency appreciation

No more merits from Lower Ship price

- Best Technology- Extensive Preparation

Competitiveness

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Global base

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

OsloLondon

Athens Tokyo

KojeShipyard

Dubai

Rongcheng

Ningbo

Singapore

Houston

Shipyard Overseas subsidiary

Branch office

Malaysia

Houston

India

Moscow

Chinablock

factory

Ningbo (Start :1997)- 240,000 tons in 2008- 250,000 tons in 2010

Rongcheng (Start: 2007)- 56,000 tons in 2008- 300,000 tons in 2010

Offshoreengineering

center

Houston- Production facility

engineering design

India- Production facility

basic design

Shipyard joint

venture

Brazil (Atlantico Shipyard)- Assets US$780m, Capital US$220m (SHI:10%)- Suezmax, VLCC, Semi Rig Hull

Brazil

Globalization Strategy

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Site 3.3million Quay Wall Length: 7.8Km

Berthing Capacity: 23vessels

Dock 1 Dock : 283m x 46m2 Dock : 390m x 65m3 Dock : 640m x 98m

G1 Dock: 270m x 52mG2 Dock: 400m x 55m

G3 Dock: 400m x 70mG4 Dock: 420m x 70m

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

Floating Crane3,000 ton

3,600 ton8,000 tonShinHanne Factory

Floating Dock 1

Shipyard View

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This presentation has been prepared by Samsung Heavy Industries Co., Ltd. andcontains 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,

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