POSCO : 2017 2Q Earnings Release

This presentation was prepared to release the company's 2Q 2017 business performance prior to the completion of auditing for the purpose of providing information to shareholders and investors. As figures in this presentation are based on unaudited financial statements, certain contents may be subject to modification in the course of auditing process. Therefore, this material can not be used, in any case, as an evidence to clarify legal liability of any investment outcome.

Parent Performance (Production / Sales)

2Q Business Performance

(thousand tons, thousand KRW/ton)

• Product Sales Price

  • Carbon Steel : +34 thousand KRW/ton

  • STS : -98 thousand KRW/ton

    2Q 16	1Q 17	2Q 17
    			QoQ
    Crude Steel Production		9,007	9,081	8,801	-280
    Product Production		8,861	8,706	8,520	-186
    STS	502	481	518	37
    Product Sales		9,005	8,722	8,463	-259
    STS	513	483	509	26
    Carbon Steel Sales Price		557	671	705	34
    WP Sales Ratio (%)		45.3	53.4	56.0	-
    Export Ratio (%)		47.0	47.2	46.7	-
    Product Inventory		972	974	977	3

     WP Ratio : 1Q) 53.4 → 2Q) 56.0% (+2.6%p)

    • Domestic Sales Ratio

      : 1Q) 52.8 → 2Q) 53.3% (+0.5%p)

      [ 2017 Maintenance Plan ]

      1Q 2Q 3Q 4Q

      BF*

      Down- stream

      P) No.3 BF Revamping (Feb~Jun)

      P) CGL (Mar~Apr)

      P) No.3 Plate Mill (Apr~May)

      P) No.1 Hot Rolling Mill (May~Jun)

      G) No.3 Hot Rolling Mill (Oct~Nov)

      G) No.3 Cold Rolling Mill (Oct~Jan.'18)

      P) New No.3 ZRM* (Feb)

      G) New No.7 CGL (Apr)

      2Q Earnings Release │ July 20, 2017

      * BF : Blast Furnace, P) Pohang Works, G) Gwangyang Works, ZRM : Electrical Steel Mill

      3

      Parent Performance

      2Q Business Performance

      OP down from high-priced inventory sales despite rise of sales price

      (billion KRW)

      2Q 16	1Q 17	2Q 17
      			QoQ
      Revenue	6,010	7,067	7,134	67
      Cost of Goods Sold	4,851	5,843	6,133	290
      Gross Profit	1,159	1,224	1,001	-223
      (Gross Margin)	(19.3%)	(17.3%)	(14.0%)	-
      SG&A	446	429	416	-13
      Operating Profit	713	795	585	-210
      (Operating Margin)	(11.9%)	(11.3%)	(8.2%)	-
      Non-Operating Profit	-317	275	66	-209
      Net Profit	311	840	509	-331
      (Net Margin)	(5.2%)	(11.9%)	(7.1%)	-

• Operating Profit Variance

Sales Price Increase

(billion KRW)

+217 Sale of Expensive Inventory

Raw

MaterialProduction

-281

-210

• Net Profit Variance (billion KRW)

  • Disposal of investment securities : +96

  • Decrease of operating profit : -210

  • Base effect from write-back of impairment loss on stock in 1Q : -226

[Financial Structure] Record low liabilities ratio

(billion KRW)

Liabilities Ratio

19.2% 17.6%16.3%

Net Debt 10

-330 -153

'16.2Q

'17.1Q

'17.2Q

4

2Q Earnings Release │ July 20, 2017