0
China Steel CorporationMarch 12, 2013
1
•Company Overview 2
•Performance 5
•Financial Review 10
•EPS & Dividends (common stock) 12
•Sales 13
•Strategy 15
Table of Contents
Leading manufacturer of flat steel products
Continuously upgrading towards highervalue-added products
Dominant market position domestically
Continue to capture rapid growthin South East Asia and China markets
2
Company overview:Business snapshot (CSC standalone)
Overview
Leading Taiwanese steel manufacturer with integrated production capabilities
Headquartered in Kaohsiung with major production sites located in Kaohsiung
Annual capacity of 9.9 mmt as of Dec 31, 2012
Major business
Steel Sales revenue breakdown by products
(Year 2012)
Domestic/Export by revenue (Year 2012)
Domestic 67%
Export 33%
22%54% 57% 64% 69%
25%
88%36%
14% 23%
Hot-Galvanized
Steel
Bar/Rod Electro-
Galvanized
Plate Cold-rolled Hot-rolled Electrical Steel
CSC Dragon Steel Chung Hung
3
Company overview:Business snapshot (CSC Group)
Steel Core Businesses Other Group Businesses
Engineering Businesses
China Steel Machinery Corporation
China Steel Structure Co., Ltd.
China Ecotek Corporation
Industrial Materials Businesses
C. S. Aluminum Corporation
China Steel Chemical Corporation
CHC Resources Corporation
Himag Magnetic Corporation
Logistic Businesses
China Steel Express Corporation
China Steel Global Trading Corporation
Service and Investments Businesses
Gains Investment Corporation
China Steel Security Corporation
Info-Champ Systems Corporation
China Prosperity Development Corporation
CSC Group domestic market share (2012)
Our group crude steel capacity reached 13.4 mmt as of December 31, 2012(combining China Steel Corporation and Dragon Steel’s EAF and No.1 blast furnace).
Capacity & market share
Major business
China Steel Corporation
Chung Hung Steel
Corporation
Dragon Steel Corporation
CSC Steel Sdn. Bhd.
China Steel Sumikin Vietnam
CSVC
China Steel Precision
Materials
China Steel Corporation India
Pvt. Ltd
4
Company overview: Group capacity & Production lines
9.9 9.9 9.9 9.9 9.9
0.9 1.0 1.0 1.0 1.4
2.0 2.5 2.5
5.0
2009 2010 2011 2012 2013
China Steel Dragon Electric Arc Furnace Dragon Blast Furnace
Crude steel capacity (mmt)
Group capacity Progress of new capacity/production lines: CSC & DSC
Q2 2014
CSCI
Project
FEB 2010
#1 BF
JUL 2010
HSM
Q1 2013
#2 BF
MAY 2011
#3 CR Mill / #3 CGL
(1.2 mmt)
(1.5 mmt)
(2.5 mmt)
(3 mmt)
(0.2 mmt)
(2.5 mmt)
Q1 2013
HSM
Expansion
(3 mmt → 4 mmt)
(0.15 mmt)
CSC
DSC
MAY 2014
NGO Line
Q2 2013
CSVC Project
-5%
0%
5%
10%
15%
20%
25%
30%
-50,000
-
50,000
100,000
150,000
200,000
250,000
300,000 revenue
gross
profit
pre-tax
profit
gross
margin%
5
Performance-CSC standalone
unit: NT$ million 2006 2007 2008 2009 2010 2011 2012*
revenue 177,658 207,919 256,358 165,409 239,187 240,376 207,193
pretax profits 47,679 61,652 30,255 20,160 44,094 20,285 6,131
gains from
subsidiaries
(equity method )
9,631 12,118 1,804 9,334 8,248 5,151 -
Revenue and Profits
unit: NT$ million
*preliminary result.
6
Performance- consolidated basis
Units: NT$ millions Consolidated Income Statement
2009 2010 2011 2012.1-3Q
Revenues 251,112 350,205 401,027 274,447
Gross profit 27,506 63,356 36,597 13,924
Gross margins 10.95% 18.09% 9.13% 5.07%
Profit before tax 21,426 50,715 23,365 4,899
Net income 21,807 41,660 20,830 3,964
Belong to
The Corporation’s
Stockholders
19,603 37,587 19,494 3,808
Minority Interests 2,204 4,073 1,337 156
7
Performance- CSC Group operating results
(Jan. & accumulated 2013)
Amount: NT$ million
Item January 2013 Accumulated of 2013
Consolidated Operating Revenue 32,510 32,510
Consolidated Operating Income 1,475 1,475
Consolidated Income
Before Income Tax1,440 1,440
Performance: ASP vs. Cost (CSC standalone)
6,0008,000
10,00012,00014,00016,00018,00020,00022,00024,00026,00028,00030,00032,00034,000
Average Selling price Average Cost of Good Sold
($NT/MT)
8
9
Performance- Cash flow (CSC standalone)
54,243
49,294 47,651
52,717
28,418
43,252
48,216
10,152
29,218
10,879
33,091
13,20117,328
39,359
25,406
50,551
20,513
37,732
7,928
16,02912,911
16,754 17,929
21,720 29,837
17,189 15,190
0
10,000
20,000
30,000
40,000
50,000
60,000
2004 2005 2006 2007 2008 2009 2010 2011 2012.1-3Q
Operating cash flow (inflow) Capital expenditure+LT investments Capex
Units: NT$ millions
Including NTD 20
billion investment
of DSCIncluding NTD 21.2
billion investment of
DSC
Including NTD 13.2
billion investment of
DSC
Including NTD
16 billion
investment of
DSC
10
Performance: financial review (CSC standalone)
12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 9/30/2012
Debt 59,285 116,898 98,948 116,437 133,348 157,691
Debt/Equity 26.63% 48.96% 40.66% 43.78% 46.21% 56.90%
Asset 281,941 355,639 342,307 382,387 421,935 434,851
Debt / Asset 21% 33% 29% 30% 32% 36%
Net Debt * 29,240 104,425 87,759 112,198 130,434 153,726
Net Debt
/Asset 10% 29% 26% 29% 31% 35%
Units: NT$ millions
* Net debt = debt - cash&cash equivalents – ( financial assets measured at fair value
through profit or loss + available-for-sale financial asset+ hedging derivative assets-
current)
11
2012.1-3Q profits from subsidiaries & affiliates totaled NT$ 1.95 billion
* listed company
-1,456
-1,296
22
45
103
116
117
265
290
315
435
491
2,452
-2,000 -1,500 -1,000 -500 - 500 1,000 1,500 2,000 2,500 3,000
Dragon Steel
*Chung Hung+3
CSC Australia
CSAPH
*CHC Resources
China Prosperity Development
*CS Structure
*China Ecotek
CS Global Trading
CS Machinery
*CS Chemical
CS Aluminum
CS Express
UNIT: Million NTD$
0.8
0 1.4
0
3.0
0 3.9
0
3.7
5
2.7
8 3.5
0
1.3
0
1.0
1
1.9
90.1
5
0.3
5
0.5
0
0.3
5
0.3
0
0.3
0
0.4
3
0.3
3
0.5
0
0.8
2
1.8
6
3.9
4
5.2
6
4.8
3
3.5
6
4.4
9
2.0
3
1.5
4
2.8
3
1.3
6
1.0
1
0.2
0 0.1
5
-
1.00
2.00
3.00
4.00
5.00
6.00
cash dividend stock dividend EPS
122 83 85 84 85 87 85 85 87 88Dividend payout(%)
20112001 2002 2004 20062003 2005 20082007 2009 2010
Performance- Historical EPS and dividends paid
We maintain a high cash dividend policy to our investors and have consistently paid out 80% to 90% over the last ten years
85
(in NTD per share)
12
21.8%
20.4%
15.6%
9.3%
7.2%
7.1%
6.0%
3.5%
3.3%
3%
1.9%
0.9%
0% 5% 10% 15% 20% 25%
Direct users
Coil center
Bolts-nuts
Re-rolling
Steel structure
Piping
Vehicles
Trader
Ship-building
Others
Hand tools
Wire-rope
13
Sales (CSC standalone)
Year 2012 CSC sales volume totaled 8.79 million metric tons
Export 34.46%(3.03 million metric tons)
Domestic/Export sales volume breakdown of Year 2012
Domestic 65.54%(5.76 million metric tons)
Japan22.4%China 24.8%
S.E. Asia31.2%
Others 21.6%
Re-rolling
Bolts-nuts
Ship-building
Coil center
Piping
Vehicles
Plate,
12.4%
Bar/Rod,
21.3%
Semi
Product,
2.0%
Cold-
Rolled,
19.5%
Coated
Products,
17.8%
Hot-
Rolled,
27.0%
23.1%
17.7%
17.1%
12.0%
9.8%
5.8%
4.7%
2.7%
2.6%
2.3%
1.5%
0.7%
0% 5% 10% 15% 20% 25%
Re-rolling
Coil center
Direct users
Bolts-nuts
Piping
Steel structure
Vehicles
Trader
Ship-building
Others
Hand tools
Wire-rope
14
Sales (CSC +DSC:HRC)
Year 2012 sales volume (CSC & HRC of DSC) totaled 11.10 million metric tons Domestic/Export sales volume breakdown of Year 2012
Export 32.55%(3.61million metric tons)
Domestic 67.45%(7.49 million metric tons)
Re-rolling
Bolts-nuts
Ship-building
Coil center
Piping
Vehicles
Japan21.6%China 22.0%
S.E. Asia 34.5%
Others 21.9%
Plate,
9.8%
Bar/Rod,
16.9%
Semi
Product,
1.6%
Cold-
Rolled,
15.4%
Coated
Products,
14.1%
Hot-
Rolled,
42.2%
15
Key strategies to achieve the vision
Secure self-sufficiency in raw materials through strategic upstream investment
1
Increase the supply chain value of steel-related industries by developing and trying out new product
3
Enhance corporate culture handing-down, reinforce human resources training & development, and solidify plans for management succession
4
Enhance client relationships and networks through engineering, technical, and information management services
5
With the key strategies implemented, China Steel Corporation aims to become a trustworthy steel partner pursuing growth, environmental protection, energy saving and value-innovation
Strengthen sales channels through overseas investment2
16
Secure self-sufficiency in raw materials through strategic upstream investment
To secure 30% of major raw materials through investments in mines and find multiple sources of semi-products
Major raw materials
Iron ore and coking coals are secured by long-term contract
(volume)
Partner with parties in Japan, South Korea, Mainland
China, Australia and Brazil
Secure lime stone - acquired 39.04%(group shareholding) in Hsin
Hsin Cement
Semi-products
Secure supplies from strategic partnerships and JV’s
East Asia United Steel Corp.
Utilize Sumitomo’s Wakayama plant to produce slab steel
A reliable supply source for slab
Vietnam investment with Formosa Plastics Group
Access to semi-finished steel with lower transportation costs
and market risks
Ferro-alloy
Long-term contract to reduce market risks
Purchased 5% stake in Dongbu Metal, Korea’s largest ferro-
alloys producer
Ensures a long-term stable supply of medium and low carbon
manganese ferro-alloy
Semi-products Ferro alloyMajor raw materials
East Asia United Corp.
Acquired 5% stake in Sonoma coal project (investment amount AUD$16.0mm)
Acquired 5% in Dongbu Metal Co ($47.8bn WON, approximately US$43.9mm)
Coal &Iron ore
Holds 1% of NAMISA company (investment amount JPY$8.5bn, approximately US$103.1mm)
Iron
Invested 5% (US$175 mn) in Formosa Ha Tinh Steel Corporation
Acquired 39.04% in Hsin Hsin Cement for lime stone
Acquired 2.5% stake in Roy Hill iron ore project (investment amount AUD$305.2mm)
Acquired 3.68% of 2 subsidiaries of ArcelorMittal Mines Canada (investment amount USD$270mm)
Iron
17
Strengthen sales channels through overseas investment
Malaysia
CSC Steel Holdings Berhad
Capacity: CR 0.60 mmt (CRC 0.36 mmt
including PO, GI 0.12 mmt, PPGI 0.12 mmt)Vietnam
CSGT Metals Vietnam Joint Stock
Company
Vietnam
CSC holds 51% of CSVC
Capacity: 1.2 mmt (CR 0.5 mmt, GA/GI
0.3 mmt, ES 0.2 mmt, PO 0.2 mmt)
China
Maruichi Metal Product (Foshan)
Co., Ltd
China
Changshu Baoshunchang Steel
Processing Co., Ltd
China
Invest US$30.5mm in China Steel
Precision Materials to acquire 70%
of the Chartered Capital.
Capacity: 19,000 metric tones
Thailand
Thai Sumilox
Company Limited
China
PCMI Metal Products (Chongqing) Co., Ltd
Italy
Ardemagni SpA
Overseas Investments of CSC group Co-invest in coil centers with peers and customers through China Steel Global Trading Co.
New Asia Project
China
Guangzhou Mayer Corp., Ltd
India
China Steel Corporation
India Pvt. Ltd. (CSCI)
Capacity: ES 0.2 mmt
China
Qingdao China Steel Precision Metal
Co., Ltd
18
Increase the supply chain value of steel-related industries
by developing and trying out new product
China Steel Corporation has committed significant efforts/developments in downstream higher value-added, higher margin steel products alongside its customers
Industry R & D Alliance
Total est.
expenditure
(US$mm)
Fasteners High value-added fasteners 2.4
Motors
Development of high value-
added technologies for the
motor industry
6.8
R&D alliance for AHSS and
forming technology for
automobile
2.2
R&D alliance for tube hydro-
forming technology for
automobile
4.1
Auto panel
and inner
parts
R&D alliance for advanced
molding technology for
automobile panels
3.2
Wire
CTRA for wafer-cutting
electroplated diamond wire
saws
3.1
Steel plate
Preliminary R&D plan for high
precision stamp-formed needle
roller bearings made of locally-
made low-alloy steel plate
0.1
Total 21.9
Auto
structure
parts
Co-development for value-added products R&D alliances
Aim for further growth and success with downstream
customers
Close collaboration with our customers, research
institutions, and universities for higher value-added
products
Increase end market’s demand for higher value-added
products
ResearchInstitutes &Universities
DownstreamCustomers
R&D alliance
Design-in & Spec.-in
19
Enhance client relationship and networks through value-added services
Technical services
Mega Steel in Malaysia
Formosa Ha TinhSteel Corporation
Vietnam cold rolling mill
Engineering services
Expansion project stage II phase II of DSC
Formosa Ha TinhSteel Corporation
Vietnam cold rolling mill “New Asia” projects
Others
Domestic and oversea consulting services regarding environmental protection and energy saving
Customer services
Real-time information services of order status
Applied technology services
Early vender involvement