December 2014

Samsung

Heavy

Industries

Shell LNG FPSO (219m ×42m×19)

• Company Overview • Global Market

Contents

※ Shell LNG FPSO 468m x 74m x 42m

3

· Business Highlights

· Order & Backlog

· Risk Management

· Financial Results

※ A series of Drillships for Ocean Rig

Company Overview

1.6

4.7

7.1

6.1

10.8 8.7

8.3

6.2

-1.0

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

-

5.0

10.0

15.0

20.0

2006 2007 2008 2009 2010 2011 2012 2013

Offshore

Shipbuilding

E&I

OP margin

Revenue & OP margin

(KRWt) (%)

4

Business Highlights

2013 Revenue

Offshore

62%

Shipbuilding

35%

E&I

3%

(KRWt)

Backlog as of Nov 30, 2014

※ E&I Division excluded

Offshore

67%

Shipbuilding

33%

(US$b)

EPS and DPS

(KRW) (KRW)

※ 2010~2013, K-IFRS Consolidated Basis

8.5 10.6

13.1 13.1 14.5

6.4

13.4 14.8

675

2,178

2,899 2,900

3,848

3,777 3,674

2,914

-

200

400

600

0

1000

2000

3000

4000

5000

2006 2007 2008 2009 2010 2011 2012 2013

EPS DPS

5

Order & Backlog

(US$b) Order Backlog

2014 New Order Details

※ As of Nov 30, 2014

Container Ship

(9%)

(US$b)

New Order

$6.6Bil

(29 Units)

Order Backlog Trend (US$b)

Drilling Rig

(29%)

Production

Facility

(37%)

LNG

Carrier

(18%)

Tanker

(4%)

Container-

Ship

(16%)

Others

(3%)

'06 '07 '08 '09 '10 '11 '12 '13 '14.Oct

Drilling Rig

Production Facility

LNG Carrier

Container Ship

Tanker

Others(WTIV etc.) 14.9 15.3 13.5

21.2

1.4

9.7 9.6

13.3

6.6

'06 '07 '08 '09 '10 '11 '12 '13 '14.Nov

Offshore

Shipbuilding

26.3

42.1

48.7

37.2 39.3 40.7

38.3 37.5 34.8

Production

Facility

(24%)

Drillship

(20%)

LNGC

(15%)

Tanker

(14%)

Others

(11%)

6

Risk Management

6

Building Event

Time Gap (months) 12 5 3 10

Currency

Receivable

Payable

Raw Material

Main Engine

Machinery

Steel Plate

Bulk Part

■ 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 after contract signing.

No hedge tools available for steel plates, SHI put buffer on bidding price to cope with unexpected price hike.

7

Financial Results

(KRWb)

■ Income Statement

※ 2010~2014, K-IFRS Consolidated Basis

2010 2011 2012 2013 2014

1Q 2Q 3Q

Sales 13,146 13,391 14,490 14,835 3,431 3,107 3,263 9,801

Shipbuilding & Offshore

E&I

12,160

986

12,319

1,072

13,634

856

14,358

477

3,374

57

3,033

74

3,226

37

9,633

168

Operating Profit

(Margin)

1,432

(10.8%)

1,160

(8.7%)

1,206

(8.3%)

914

(6.2%)

-362

(-10.6%)

262

(8.4%)

182

(5.6%)

82

(0.8%)

Pre-Tax Income 1,298 1,150 1,045 819 -294 263 175 144

Non-OP Income

Non-OP Expense

85

219

204

214

4,534

4,695

3,826

3,921

565

496

1,606

1,605

960

967

2,079

2,017

Net Income 1,000 851 796 632 -272 206 172 106

■ Balance Sheet

8

(KRWb)

Financial Results

※ 2010~2014, K-IFRS Consolidated Basis

2010 2011 2012 2013(A) 2014.3Q(B) B – A

Total Assets 18,850 16,414 16,635 17,427 17,265 -162

Cash & Equiv.

Accounts Receivable

Advance Payments

Hedge Related

Inventories

1,255

5,449

1,638

3,370

607

1,289

4,078

1,675

2,592

540

1,164

5,091

1,501

2,064

699

1,140

5,935

1,354

2,035

842

1,544

5,391

1,186

1,765

980

404

-544

-168

-270

138

Total Liabilities 14,718 11,770 11,352 11,581 11,412 -169

Advance Receipts

Debts

Hedge Related

5,431

2,838

3,578

5,602

1,784

2,452

3,967

3,193

1,458

3,885

2,937

1,725

3,803

3,216

1,513

-82

279

-212

Total Equity 4,132 4,644 5,283 5,846 5,853 7

Paid in Capital

Treasury Stock

1,155

-662

1,155

-659

1,155

-657

1,155

-656

1,155

-649

-

7

Total Liab. & Equity 18,850 16,414 16,635 17,427 17,265 -162

9

· Global New Orders

· Major Market Situation

- Commercial Vessel Market

- Offshore Market

※ Major Products of SHI : Container Ship, LNG Carrier, Drillship and FPSO (clockwise from upper left)

Global Market

-

20

40

60

80

100

120

140

160

180

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14.Oct

LNG Carrier

Containership

Tanker

Bulker

Other

10

(Mil. GT)

46

35

77 74 69

116

177

111

30

AVG : 36

31

AVG : 73

AVG : 135

Increasing sea trade volume coupled with Chinese effect had lead huge orders during 2003~2008.

After sharp decrease in 2009, new orders has been normalized at around 50mil. GT in average.

New orders rebound in 2013-2014 with structural improvement of supply & demand.

76

50

Historical Orders by Ship Type and Country

Korea

China

Japan

Global New Orders

34

96

AVG : 53

63

1,660 1,670 1,740

3,240

1,170

90

560

1,770

410

1,937

872

-

500

1,000

1,500

2,000

2,500

3,000

3,500

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E

New Orders13 11

11

10

4

-9

12

8

4

5 6 7

9 10

13

17

14 13

6

10

8 6

4

6

-10

-5

0

5

10

15

20Trade Growth

Fleet Growth

Commercial Vessel : A Gradual Recovery

11

Container Ship: Rebound in 2013

Source: Clarksons

(,000 TEU) (%)

0

50

100

150

200

250

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '200

20

40

60

80

100

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

20

40

60

80

100

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Recovery Recovery Recovery

(Mil. DWT) (Mil. DWT) (Mil. DWT)

* Supply: Current Fleet + Annual Delivery of Backlog – Annual Demolition in Avg. , Demand: Trading

Tanker: Slow Recovery by sizes

Supply

Demand Supply

Demand

Supply

Demand

< A-Max > < VLCC > < S-Max>

Recovery

-

5,000

10,000

Oil (34%)

Natural Gas (24%)

Coal (30%)

Hydro Electricity(7%)

Nuclear (5%)

0

50

100

150

200

Korea Japan China

200

50

8

90 (75%)

16 (13%) 14 (12%)

Delivery ('01 ~ '14.Jul)

Orderbook

LNG Demand & LNGC Fleet Forecast

12

Energy Consumption & LNG Trading

(MTOE)

Pipeline 523

(69%) Trading

762

3.0 Bil. Ton Consumption

(Mil.Ton LNG, ’13)

LNG 239

(31%)

Source: BP, Andy Flower, SHI Forecast

Economical

Eco-

Friendly

LNGC Global M/S

(Unit)

Source: Clarksons

LNG Carrier : Solid Demand

100 110

130 154

165 221

243

279

316

359

410

128 139 176

223

299

363 372

446

521

601

681

-

100

200

300

400

500

600

700

800

-

50

100

150

200

250

300

350

400

450

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

LNG Demand

LNGC Fleet

(Mil.Ton) (Unit)

Source: BP

‘60 ‘80 ’00 ‘11

Oil

Natural Gas Nuclear

Coal

Hydroelectricity.

Renewable

13

LNG Production & Supply Chain

LNG Derivatives : Convergence of Technology & Business

14

LNG FPSO

Amount 5 Bil $/ vessel

(subject to change)

Target Field Prelude (Australia)

Capacity 3.5 mtpa

Storage 450k cbm

Why LNG FPSO?

Global CAPEX Forecast on FLNG

Source: Douglas Westwood, 2013. Apr

Natural Gas

Pretreatment

Liquefaction

Shell’s 1st LNG FPSO Project

LNG FPSO

Less CAPEX

[25%]

Mobility

[Easily Relocated]

Traditional Onshore Plant

+

LNG FPSO Market – New Business Opportunity

(US$b)

• Construction started in 2012.Oct

• Delivery scheduled for early 2016

-

3

6

9

12

'11 '12 '13 '14(E) '15(E) '16(E) '17(E)

Offshore Market – Why Deep Water?

Supply Increase in Deep Water

1930 1950 1972 1993 2007 2014 2030

Global Oil Supply 1930~2030 (Mil Barrels oil/d)

Conventional Onshore

Deep Water

Shallow Water

Oil Sands

<Deep Water Supply Ratio>

‘00 ‘10 ’25(E)

2% 8.5% 13%

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)

16

14

12

10

8

6

4

2

0

Source: Douglas Westwood, 2013. May

Global Deep Water CAPEX

Global Oil Price Forecast

($/Barrel)

(110~160)

(90~110)

(70~90)

Source: EIA 15

Source: Douglas Westwood, Energyfiles

Shallow water

Deep water

(US$b)

-

20

40

60

80

100

120

140

160

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

* Drilling, Prodution, Subsea included

19 12 10

1 3 4 12

4 3

9 15 19

2 6

33

34

12 4

0

10

20

30

40

50

'06 '07 '08 '09 '10 '11 '12 '13 '14

Drillship

Semi-Sub

16

Drilling Rig – Market Fundamentals remain firm

Diversifying Rig Market

Applicable to Harsh Areas

High Stability

Continuous Demand

The most Beneficial Choice

Jack-Up

Drillship

Semi-Submersible

<Offshore Rig Order >

(Unit)

(8)

( ) Orders in Brazil

Strong Market Demand for Deepwater Drillships

New Specification

Bigger & Complicated to boost North Sea

<UDW Drillship Day Rate>

Source: Ocean Rig, 2014. Mar

High

Day Rate

(15)

(US$k)

17

Production Facility – Following the Rigs

Products

Fixed Platform

FPSO

FPU

TLP

FPSO

58% FPU

15%

Fixed Platform

13% TLP & SPAR

14%

’13 ’14(E) ’15(E) ’16(E) ’17(E) ’18(E) ’19(E)

Demand(*) 28 28 27 25 23 30 32

Order Forecast 9 14 14 13 12 15 16

Amount(US$b) 15 15 15 14 13 16 17

*: New Build 50%, Conversion 50%

Order Forecast for Offshore Production Facilities

(Unit)

Source: Clarksons, SHI

Fleets

0

50

100

150

200

250

300

350

400

'05 '06 '07 '08 '09 '10 '11 '12 '13(E) '14(E) '15(E)

Fixed Platform

TLP & SPAR

FPU

FPSO

(Unit)

Source: Clarksons, 2013. Mar

18

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

Block Factories

in China

Ningbo (Since 1997) – 250,000 tons in 2010

Rongcheng (Since 2007) – 300,000 tons in 2010

Offshore

Engineering Centers

Houston – ASOG (The J/V with AMEC)

India(Noida) – Basic Design Center

Appendix – Global Network

Oslo

London

Athens

Tokyo

Geoje

Shipyard

Dubai

Rongcheng

Ningbo

Singapore

Houston

Malaysia

Houston

India (Noida)

Moscow

Brazil

Lagos

Shanghai

Shipyard

Block Factory

Engineering Center

Branch Office

19

■ Site 4.0million ㎡

■ Quay Wall Length: 7.9Km

Berthing Capacity: 24vessels

■ Dock 1 Dock : 283m x 46m

2 Dock : 390m x 65m

3 Dock : 640m x 98m

G1 Dock: 270m x 52m

G2 Dock: 400m x 55m

G3 Dock: 400m x 70m

G4 Dock: 420m x 70m

G5 Dock: 158m x 150m (only for Offshore)

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 Crane

3,000 ton

3,600 ton

8,000 ton

ShinHanne Factory

Floating Dock 1

Appendix - Shipyard View

Floating Dock 5

20

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

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