1

2

CONTENTS

4. VISION

1. About Company

2. Management Strategy for Year 2002

3. Mid-and Long-Term Management Strategy

3

1. History of Growth

2. Market Position

3. Restructuring

4. Operational Performance

5. Financial Condition

About Company

4

1954 ~ 1970’s

1954 ~ 1970’s 1980’s 1980’s

1990’s 1990’s

2000’s 2000’s

History of Growth

Sales in FY2001 : W1,736bn

Textile1954. Founded

1995. Established Local T

extile Company in Ti

anjin, China

Fashion

1983. Started Fashion Biz

1999. Took over Apparel

Biz from Samsung

Corporation

Chemicals

1989. Completed ABS

and PS Plant

1997. Launched the

Artificial Marble

Biz

ElectronicChemical Materials

1996. Put EMC on the

Market

1999. Developed 9 New

Products

2002. Completed Gumi

IT Production

Plant

About Company

Successful Transformation

W209bn(12%) W747bn (43%) W740bn (43%) W40bn (2%)

5

Market Position (2001)

Textile Fashion Chemicals Electronic Chemical Materials

World’s largest textile maker (18mn m/year)

• Korea’s best total fashion company

• Second largest maker in Korea

• Special product-oriented business structure

• Korea’s largest business structure in electronic chemical materials

Sta

tus

About Company

High Level M/S

• 36% for Monitor (#1)• 46% in FR ABS for Monitor (#1)

• 12% for Color TV (#2)• 12% for Refrigerator (#2)• 10% in Artificial Marble (#3)

Glo

bal M

/S

• 12% in business suits textile in USA • 13% in business suit textile in Japan (#1)

• 40% in high quality business suits (#1)• ‘Bean Pole’ : best-known traditional casual brand in Korea

• 23% in all ABS products (#2)• 50% in Cellular Phone Resin (#1)• 36% in Artificial Marble(#1)

• 53% in business suits textile (#1)

• 38% in EMC (#1)• 40% in EMS for cellular phone (#1)

Dom

estic

M/S

6

19971997 20012001

Restructuring

Employee Reduction

Sound Financial Condition through

Sale of Assets

Business Structure Reform

Take over of Fashion Biz from Sam

sung Corp.

- 41%3,727 2,197Employee

s

- 186%p108 %D/E Ratio 294 %

Build-up of stable basis for making profits through synergy effect

Profit-making in all biz and brandsClosure of Non-Profitable Biz

Separation of Part of Production Lines and Sales units

Risk management through minimization of fixed costs

About Company

Successful Restructuring

7

-44

49

79 82

Operational Performance

142 219 221 209

252

513747

560

717740

691

564

4033

27

19

SalesSales

( \bn )

Record Best Performance for Two Consecutive Years

계계 9,721 9,721 13,21813,218 16,60716,607 17,36017,360

RP (margin)RP (margin)

( \bn )

ECM

Chemicals

Fashion

Textile

’98 ’99

’00

’01

About Company

’98 ’99

’00

’01

(5%)

(4%)

(5%)

(-5%)

• Increasing Sales of High Value Added products • Successful Restructuring

8

130

118108

186

638 599 555

859

• Successful Restructuring

• Increased ProfitabilitySound Financial Condition

Financial Condition

Borrowings

( \bn )

D/E Ratio

(%)

’98 ’99

’00

’01 ’98 ’99

’00

’01

About Company

9

1. Sales

2. Operating Profit

3. Recurring Profit

4. Management Strategy by Divisions

Management Strategy For Year 2002

10

1,661 1,736 1,850

1,322

Sales

Sales

( \bn )

Management Strategy for Year 2002

’99

’00

’01 ’02(E)

ECM90 (5%)

Textile200 (11%)

Fashion760 (41%)

Chemicals800 (43%)

Sales by Division (Ratio)

Sales Growth : 7%

11

Operating Profit

181 177

220

155

Operating Profit

( \bn )

’99

’00

’01 ’02(E)

ECM19 (21%)

Textile42 (21%)

Fashion87 (11%)

Chemicals72 (9%)

OP by Division (Margin)


Operating Profit Growth : 25%

12

Recurring Profit

79 82

120

49

Recurring Profit

( \bn )

’99

’00

’01 ’02(E)

ECM15 (17%)

Textile17 (9%)

Fashion42 (6%)

Chemicals46 (6%)

RP by Division (Margin)


Recurring Profit Growth : 46%

13

E C M

ChemicalsChemicals

Management Strategy by Divisions

Stabilization through Sales Growth (Sales Plan: \90bn )• Increase in Sales of Present products (EMC, Electrolyte, EMS, Paste, OPC, Ink)• Early Sale of New Products (CMP Slurry, CR)• Increase in Exports by Reinforcing Overseas Marketing Activities• Strategic Alliance with Leading Foreign Makers

Strengthening of Profit-oriented Biz Structure (Sales Plan: \800bn)

<Chemical Resins> • Increase in Sales of High Value Added Products (FR, Extrusion, Transparent ABS, etc.)• Strengthening of Cost Competitiveness through Reinforcement of Production power by improving Work Process• Increase in Exports to China

<Artificial Marble>• Increase in Exports to USA by Reinforcing Marketing Activities in USA• Maintaining No. 1 M/S in Korea• Strengthening of Sales Power through Extension of Related Biz


14

Fashion

Textile

Profit-oriented Business Structure (Sales Plan: \760bn)

• Brand Value-First Management

• Weight Increase in Casual Wear Business

• Regularized Overseas Market Entry of Independent Brands - Establishment of Sales Company in China

• Expansion of Non-discounted Brands

• Entry into New Markets through Line Extension of Core Brands

• Build-up of Overseas Sourcing Base of Design and Production

Business Structure with Stable Profitability (Sales Plan: \200bn)

• Expansion of High Quality Products

• Diversification of Markets as Expanding shares in Japanese Market• Specialization of Production by Gradually Moving Local Production Lines to China (Gumi Plant: High Quality Products, Tianjin Plant: Medium Quality Products)`


Management Strategy by Divisions

15

Mid-and Long-term Management Strategy

1. Electronic Chemical Materials

2. Chemicals

3. Fashion

4. Textile

16

Leading Business in 21C


EMC,

Liquid Encapsulant, CMP Slurry,PR, Low-K

CR, PI, ACFPolarizer Films, Organic EL, FCCL

Electrolyte,

Active MaterialEMS, Paste,

OPC, INK

Semiconductor Materials

DisplayMaterials

Secondary Li-ion Battery Materials

FunctionalMaterials

\150bn \80bn \50bn \140bn2005Sales Plan

Cultivation of High Growth & High Profit Biz

Sales in FY2005 : W420bn

E C M

17

Active material

Electrolyte

Paste

E M S

CMP SlurryCMP Slurry

C RC R

PDP PastePDP Paste

O P C

INK

Alignment Layer PIAlignment Layer PI

Polymer Electrolyte

Wave Guide

Digital Printing INK

Low-k

FED PasteOrganic E L

LCD PR

Films

P R Liquid Encapsulant

EMC

Business Start

Future Plan

Mass Production

Color Printing

Display Devices

Semiconductors

Secondary Li-ionBatteries

Functional & OpticalDevices

1996~ 2000~ 2003~


E C M

ECM Business Line-up

18

ElecrtronicElecrtronicProductsProducts

US$ 500bnUS$ 500bn

Market SizeMarket Size Related to CheilRelated to Cheil

Industries Industries US$ 10bnUS$ 10bn


E C M

Global MarketSemiconductor

US$ 22bn

Display US$ 15bn

US$ 12bn

PCB Materials

US$ 13bn

TotalUS$ 73bn

Others US$ 11bn

Electric Components Materials

Sales Realization of 8 items in 2002

19Japanese Majors : Shin-etsu, Sumitomo, Mitsubishi, Toray, TOK, Hitachi, Chisso, JSR

Global MarketGlobal Market

20%

80%

Others

Japanese Maker346

197

591

444

40 24

248

174

SemiconductorMaterials

Display Materials Secondary BatteryMaterials

FunctionalMaterials

domestic demandimport ratio

Japanese Makers Hold 80% M/S

Korean MarketKorean Market

( \bn, as of 2001)

(75%)

(60%)

(70%)(57%)

※ Figures indicate the markets into which Cheil Industries has entered.


E C M

Present ECM Market

20

Compared to Growth of IT

Business, Basis of Local

ECM Business is Weak Japanese Makers Control Global Market

Increasing of Needs to

Develop ECM Business

by Samsung Group Level Basic Technology to Develop IT and

Electronic Business is Required

Today

Concentrating All the

Company’s Investment Abilities on the Business Investment of 140bn Won for Coming

4 Years

Reinforcing of R&D Concentrating Manpower & Investment

in Development of Core Technology,

Obtaining Advanced Technology

(Scouting Foreign Experts)

Co-R&D with Samsung Affiliates

Strategy

Growing into Korea’s No. 1 Integrated ECM Maker sales: 420bn Won,

Recurring Profit : 100bn Won in 2005

Holding More Than

10% Global M/S in Major

Products

CMP Slurry, Electrolyte,

EMS, PI, etc.

Tomorrow


E C M

Making it Korea’s largest ECM Business

21

Mid- and Long-term Investment plan

Patents

USA 9, Japan 9, Taipai 22085Registration

85

65

Overseas Country basis Domestic(case)

USA 19, Japan 18, Taipai 9, China 7, the others 12

320Application

Total 405

R & D Personnel

107

R & D RatioTotal(person)

No. of Employees 230 47%

59.7

40.0

19.7

2004

105.7

76.0

29.7

200520032002(\bn)

14.310.4R&D

Total

Capex.

21.2

10.8

42.8

28.5

( \bn )


E C M

Aiming for World’s Best Technology

22

No. 1 Global M/S in High Value Added ABS, PS

High Value Added Business Structure

Chemicals

Extension of Artificial

Marble Business

• No. 1 Domestic M/S

• Global M/S of 30%

Concentration on Specialty Products

• Expansion of Transparent ABS

• Increase in Sales in Sheet ABS, FR PS

Development of Next Generation Technologies &

Products

• Reinforcing of R&D Investment

• Sale of Revolutionary New Products

• Dramatic Increase in Productivity

• No. 1 Global M/S in 3 Products (FR ABS, FE PS, Extrusion ABS)

Improved Competitiveness

Maximization of Profit


23

Brand Value-First Management

Expansion of Non- Discounted Brand Expansion of Core Brand Business

Fashion

Build-up of

Global Business System

•Overseas Market Entry of

Independent Brands

Rise in Cost Competitiveness

through Global Out-sourcing

Active Coping with

Fashion Trend

• Build-up of Optimal Business

Structure by Weight Increase in

Casual Wear Business


Growing into a Top Class Total Fashion Maker

24

Textile

World BestWoolen texitile

Producer(Quality,Profitability & Capabilit

y)Specialization of Production

by Plant

Gumi Plant : high quality products for domestic demand

Tianjin Plant: medium quality products for export

World’s Largest Production (18mn m/year)

Achieving World’s

No. 1 Quality

Raising quality to the level of Loropiana & E.Zegna

Technology Manpower Complimentary System

Special hiring of world’s top quality technical experts

Increasingprofitability

10% in RP to sales ratio


Reinforcing its Position as Global Woolen Textile Maker

25

VISION

1. Core Strategy

2. Cheil Industries in the Future

3. Goal of Income

4. Financial Structure

26

Textile

World’s No. 1 in Production

World’s No. 1 Quality & Productivity

RP Margin : 10%

Fashion

Korea’s Largest Fashion Maker

40% M/S in High Quality Business Suits

Making its Brands World-level

Making ‘Bean Pole’ Total Family Brand

Chemicals

World’s Top FR product Maker

Korea’s Second Largest ABS ㆍ PS Maker

Growing into World’s Top #5 ABS Maker with Production Capacity of 0.5mn ton/year

30% Global M/S in Artificial Marble (#2)

ECM

Only One Integrated ECM Maker in Korea

Achieving 10% Global

M/S in CMP, Electrolyte,

EMS, PI

Present

Status

Future Plan

(Year 2005)

VISION

Core Strategy

Developing World’s Top Class Products by Businesses

27

Cheil Industries in the Future

( \bn )

Sales

D/E Ratio

Recurring Profit (Margin)

Operating Profit (Margin)

VISION

Successful Change of the Company

1,736

177 (10%)

82 (5%)

108%

FY2001

Chemical Materials

& Total Fashion

2,100

286 (14%)

180 (9%)

87%

Hi-Tech Chemicals

& Total Fashion

FY2003

2,620

418 (16%)

300 (12%)

65%

Global Top Class ECM

& Total Fashion Maker

FY2005

28

209 200

747 840

740

200

1,000

1,000880

40180

420

2001 2003 2005

177

418

82

180

300286

2001 2003 2005

OP (Margin)RP (Margin )

Profit

(\bn)

Goal of Income

Operating Profit Margin 16%Recurring Profit Margin 12%

Maximization of Profitability with High Value Added

Business Structure

TotalTotal 1,736 2,100 2,620

ECM

Chemicals

Fashion

Textile

Sales

(\bn)

(10%)

(14%)

(16%)

(5%)

(9%)

(12%)

VISION

29

Financial Structure

VISION

Strong Financial Condition

555

400300

108%

65%

87%

2001 2003 2005

Borrowings(\ bn)

D/E Ratio

30

Cheil Industries serves for Customers all over the World

IR Team, Cheil Industries

TEL : 82-2-527-2042~3

Web Site : www.cii.samsung.com/ir/eng

E-mail : [email protected]

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