Investor Relations 2012
Shareholders & Business Portfolio
Balanced product mix among petrochemicals such as PE/PVC/CA
◎ Shareholder Structure
◎ Business Portfolio by Product
(as of Dec. 2011)
Floating
Shares
53.5%
(as of Dec.2011)
Hanwha
Group
42.7%
Foreign Ownership
OP Contribution by Product
15.73% (as of jun, 2012)
PE 38.2%, PVC 26.7%, CA 41.3%, Others -6.2%
2
Sites & Product Flowchart
Unique Business Structure via Vertical Integration
◎ Product Flowchart (Full Integration of Vinyl Chain)
◎ Site Location & Products
(as of Dec. 2011)
(as of Dec. 2011)
(1,000 tons/yr)
Seoul HQ
• LDPE
327
• LLDPE
355
• EDC
1,106
• VCM
350
• PVC
297
• OA
123
• Chlorine 645
• NAOH
710
• HCL
80
• ECH
25
Daejeon R&D Center
• LDPE/EVA
90
• EDC
385
• VCM
247
• PVC/PSR
305
• Chlorine
176
• NAOH
194
• PLZ
80
• PA
75
• MA
5
• PV Cell 30MW
Polymerization
PE
EVA
Ethylene
Naphtha
Compounding
YNCC
W&C
Chlorine
Ulsan Plant
Pyrolysis
Salt
Yeosu Plant
Yeochun NCC
VCM
EDC
PVC
Polymerization
Electrolysis
Water
3
NaOH
760
Hanwha
L&C
Business Affiliates & Capacity
Vertical Integration from Upstream to Downstream
(1,000 tons/yr)
(1,000 tons/yr)
Naphtha Cracker
Ethylene
Propylene
BTX
SM
BD
1,910
970
792
290
240
(as of Dec. 2011)
Polyethylene(PE)
453
140)
355
LDPE
(EVA
LLDPE
Polyvinyl chloride(PVC)
1,491
597
600
160
123
EDC
VCM
PVC/ PSR
PLZ
OA
Plastic Processing
Floorings
PVC Tiles
Automotive Parts
Artificial Marble
Solar EVA Sheets
Chlor-Alkali(CA)
821
904
25
Chlorine
NaOH
ECH
(Asian No. 2 NCC, 50% stake)
Yeochun NCC (YNCC)
(Plastic processing, 100% stake)
Hanwha Chemical
4
Hanwha L&C
Economies of Scale
Strong Presence in the Korean Petrochemical Industry
◎ Ethylene/Propylene Capacity
2,880
2,800
2,630
1,860
◎ EVA/LDPE Capacity
YNCC*
453
LG Chemical
Hanwha
LG chemical
280
Honam
110
Honam
SK Energy
100
Samsung Total
Samsung Total
1,530
(*50% owned by Hanwha Chemical)
◎ LLDPE Capacity
◎ Chlor-Alkali Capacity (Caustic Soda)
355
290
180
125
70
Hanwha
904
Honam
210
SK Energy
Samsung Total
Hanwha
LG Chemical
190
Samsung Fine
165
Others
LG Chemical
(1,000 tons/yr, Korea Petrochemical Industry Association)
5
Global Operations
Aggressively pursuing global expansion since 2008
Saudi Arabia / Jubail
China / Qidong
EVA/LDPE plant
under construction
Hanwha SolarOne
(200,000 tons/yr)
(Ingot/Wafer 400MV/yr
Cell 500MV, Module 900MV)
Thailand / Bangplee
China / Ningbo
ASR plant
PVC plant
(10,000 tons/yr)
(300,000 tons/yr)
6
Financial Summary
Performance Summary of 2011
◎ Consolidated Results
◎ Parent-only Results
(KRW bn)
Balance
Sheet
2009
2010
2011
(KRW bn)
Balance
Sheet
2012 1H
Total assets
7,184
10,977
11,854
12,077
Total liab.
4,364
6,275
7,056
SHE
2,820
4,702
4,798
2009
2010
2011
Total assets
4,818
5,731
6,234
6,451
7,405
Total liab.
2,149
2,582
2,771
2,935
4,671
SHE
2,669
3,149
3,463
3,517
(KRW bn)
Income
Statement
Revenues
2009
2010
2011
2012 1H
(KRW bn)
Income
Statement
2012 1H
5,343
6,341
7,943
3,047
OP
583
655
326
77
Pre-tax profit
469
706
281
4
Net profit
354
487
167
28
Revenues
2009
2011
2012 1H
3,034
3,628
3,970
1,768
OP
411
483
472
96
Pre-tax profit
418
367
546
178
Net profit
343
284
412
143
(Numbers in 2008 and 2009 based on K-GAAP, and numbers in 2010 and 2011 based on K-IFRS)
7
2010
Profitability & Financial Soundness
Financial Status
◎ Consolidated Operating Profit
◎ Parent-only Operating Profit
◎ Interest Coverage
◎ Liabilities-to-Equity Ratio
8
Raw Material Price Trend
Oil, Naphtha & Ethylene Price
◎ Crude Oil
◎ Naphta / Ethylene
WTI
($/ton)
Naphtha
ethylene
($/ton)
$1,600
$120
$1,400
$100
$1,200
$1,000
$80
$800
$60
$600
$40
$400
$200
$20
$
'09/01
$
'09/01
'09/07
'10/01
'10/07
'11/01
'11/07
'12/01
9
'09/07
'10/01
'10/07
'11/01
'11/07
'12/01 ‘12/07
Product Price Trend (PE)
PE PRICE
◎ LDPE & Spread
◎ LLDPE & Spread
LD
LD Spread
LLD
($/ton)
$2,000
LLD Spread
($/ton)
$1,600
$1,800
$1,400
$1,600
$1,200
$1,400
$1,000
$1,200
$1,000
$800
$800
$600
$600
$400
$400
$200
$200
$
'09/01 '09/07 '10/01 '10/07 '11/01 '11/07 '12/01
$
'09/01 '09/07 '10/01 '10/07 '11/01 '11/07 '12/01
10
Product Price Trend (PVC/CA)
Caustic Soda & PVC
◎ Caustic Soda
◎ PVC Price & Spread
Caustic Soda
PVC
($/ton)
$600
PVC Spread
($/ton)
$1,400
$1,200
$500
$1,000
$400
$800
$300
$600
$200
$400
$100
$
'09/01
$200
'09/07
'10/01
'10/07
'11/01
'11/07
$
'09/01 '09/07 '10/01 '10/07 '11/01 '11/07 '12/01
'12/01
11
Management Strategy
Global Chemical Leader 2015
Core Business Selection & Intensification
Dedicated to increasing profit and maintaining our position as the market leader in the
PE, CA and PVC industries by enhancing our global competitiveness
Expanding into New Future Businesses
Pursuing continuous growth and stable profit by expanding our business into solar, bio,
battery materials, nano and other promising industries of the 21st century
12
Specialty Maker
Key Supplier of Specialty Products
EVA
W&C Compound
In 1986, HCC began to produce EVA
based on its own technology. HCC
now produces various EVA grades,
covering a wide range of vinyl
acetate content with a melt index
that meets the most stringent
requirements of its clients
Wire and cable compound is a
polyolefin-based material added to
functional polymers. It is highly
functional, with a combination of
electrical and mechanical
characteristics, as well as strong
processing capabilities
HCC is one of the very few in the
industry with technology and
experience to manufacture ultra
clean & high VA content(above 30%)
EVA grades for PV cell encapsulation,
lamination coating, and hot melt
adhesives application
HCC is one of the top 3 in W&C
compound industry and has been in
the business since the early 80’s
HCC possesses in-house developed
technology and offers full range of
W&C compound facility design
capability
13
Alkali-Soluble Resin
HCC is one of the top 3 in ASR
industry and is the only player based
in Asia
HCC provides a broad range of
choice to customers by offering 4
grades of standard ASR and 5 grades
of specialty ASR
Environmentally friendly products
have been developed to replace
organic solvents in ink, paints and
varnishes
PE Business Strategy
(1) Higher Contribution of Specialty Products
◎ Sales Volume by Product Type
◎ Average Export Price by Product Type
(1,000 tons)
(KRW/ton)
◎ Sales Volume Increase of Specialty Products
◎ Contribution Margin by Product Type
* Specialty Products : EVA, W/C, HS LLD, Blend
(commodity contribution margin per ton in 2008 = 100)
* Commodity Products : LDPE, LLDPE
14
PE Business Strategy
(2) JV in Saudi Arabia to Secure Low-cost Feedstock
◎ Company Overview
▶
Company Name : International Polymers Co. (IPC)
▶
J/V Structure : HCC 25%, Sipchem 75%
▶
Capacity : EVA/LDPE 200 kilotons/yr
▶
Feedstock : Ethane based ethylene (tolled by SABIC)
▶
Project Status : Signed JVA – July 2009
Awarded EPC contractor – Dec. 2010
Plant operation – 3Q 2013
◎ EVA Supply and Demand

Very tight supply due to shortfall in capacity and rapid increase in global demand driven
by China and India

New demand in solar EVA sheet magnifying the supply shortage
15
CA Business Strategy
Strong Global Competitiveness & Advanced Cost Structure
◎ Asian No. 3 & Global Top 10 CA Maker through Capacity Expansion in 2010
(1,000 DMT)
16.6%
(1,000 MT)
(1,000 MT)
902
17.1%
772
821
1,341
2010
2009
11.2%
1,491
701
2009
2010
NaOH (Caustic Soda)

2009
Cl (Chlorine)
2010
EDC
Capacity expansion in Yeosu Plant (Caustic Soda: 130, Chlorine: 120, EDC: 150 kilotons/yr)
Chlorine is a product showing tendency for regional monopoly. Balanced supply/demand is expected through longterm contracts with BASF Korea, KPX Fine Chemical, Kumho Mitsui and LG-DOW.

Emerged as global top 10 maker in 2010 with production capacity of 900,000 tons of caustic soda and 820,000
tons of chlorine

16
PVC Business Strategy
Wholly Independent PVC Plant in China
◎ Capacity Expansion in 2011
◎ Strategic Significance of China PVC Plant
(1,000 MT)
50.3%
897
597

First global project of Hanwha Chemical

Stronger vinyl chain competitiveness : Emerge as a global PVC player

Maximize profitability through link with MDI business
◎ China PVC Plant Overview
2009
VCM
2011
(1,000 MT)
860
53.6%

Production Capacity : Oxy EDC 500, VCM 300, PVC 300 kilotons/yr

Location & Land Area : Zhejiang, Ningbo, 250,000㎡

S/T & Capex : Feb. 2011, KRW 360 bn

Feedstock : Anhydrous hydrochloric acid (long term contract with Wanhua)
560
◎ Effectiveness of China PVC Plant
2009
PVC
2011

Outstanding ROI compared to carbide process PVC plant

Boost in PVC chain profits via increased sales portion of CA/PVC from 2011
17
Solar Business
Global Leader in Solar Business by 2015
Ingot/wafer
400MW
500MW
◎ Acquisition of Hanwha SolarOne in 2010
◎ Business Overview

900MW
Aggressively expanding Solar business as the
new growth driver of Hanwha Chemical
Planning Polysilicon investment
- Capa. & location : 10,000 tons/yr, Yeosu
- Capex : KRW 1 trillions
- Plant operation : 2H 2013

Cost competitive manufacturing base

Accomplishing economies of scale
: Ingot/Wafer 800MV / Cell 1.3GW /
Module 1.5GW (by late 2011)

Qualified R&D & management talents

Core customers in Europe & America

Listed in NASDAQ (HSOL)

18
Cell Material & Bio Businesses
Battery
Material
Bio
Product
Global Presence based on
Cathode Material
Foundation for Bio Business
through Antibody Therapeutics

Completed in-house development of
LiFePO4 production technology (patent
registered )


Developing Biosimilar & new medicine
(HD203 in phase III of clinical trial)
Finished construction of a Semicommercial plant with a capacity of
1,000 tons/yr

Commercial plant in construction with
scheduled commercial production from
2013

Product testing in process with EV &
rechargeable battery makers

Sales contract signed with Turkish
pharmaceutical company in late 2010

Developing anode & separator material

Preparing a contract with a global major
19
Bio Business Update
Business Tie-up with Global Major Company
Bio
Product

Partner : Merck (MSD) ☞ Contract signed on Jun.10 of 2011

Product : HD203 (Biosimilar of Enbrel®(etanercept))

Hanwha will receive an upfront payment and additional payments
associated with milestones for technology transfer and regulatory
progress as well as tiered royalties on sales

Merck will conduct clinical development, manufacturing and
commercializing of HD203 in global markets (except in Korea &
Turkey)
20
Bio Business Schedule
Bio Product R&D Pipelines
Diseases
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
New Drugs
HD101
Asthma
HD104
Rheumatoid
arthritis
HD105
Solid tumors
R&D
Preclinical trial
Clinical trial
R&D
Preclinical trial
R&D
Appr.
Clinical trial
Preclinical trial
Clinical trial
Bio-similar
HD203
Rheumatoid
arthritis
HD201
Breast
cancer
HD204
Rectum
cancer
R&D
Preclinical
trial
Clinical trial
Rheumatoid
arthritis
R&D
Preclinical
trial
Clinical trial
HD205
R&D
Preclinical
trial
R&D
Clinical trial
Preclinical trial
21
Appr.
Clinical trial
Commercialization
Appr. Commercialization
Major Subsidiaries-Financial Results
◎ Hanwha L&C (Consolidation)
◎ Yeochun NCC (Equity Method)
(KRW bn)
(KRW bn)
2007
2008
2009
2007
2010
2008
2009
2010
Total assets
2,173
2,098
2,204
2,508
633
Total liab.
1,174
1,537
1,312
1,288
411
413
SHE
999
561
892
1,220
1,016
1,035
1,080
4,468
6,008
4,832
6,317
42
40
49
26
OP
296
(270)
344
538
37
8
(8)
3
NP
171
(238)
233
388
Total assets
849
968
886
1,046
Total liab.
505
602
475
SHE
344
366
Revenues
919
OP
NP
Revenues
◎ Hanwha Hotels & Resorts (Equity Method)
◎ Hanwha Galleria (Consolidation)
(KRW bn)
(KRW bn)
2007
Total assets
2008
2009
2010
1,022
1,064
1,416
1,532
Total liab.
589
631
663
749
SHE
433
433
753
Revenues
250
285
OP
35
NP
12
2007
Total assets
2008
2009
2010
1,082
1,127
1,328
1,526
Total liab.
706
750
791
1,027
783
SHE
376
377
537
499
312
320
Revenues
373
399
489
690
38
47
31
OP
22
17
32
3
0.4
13
31
NP
11
8
3
(16)
22
This material contains forward-looking statements regarding the Company’s financial conditions, operating performance
and business plans that do not relate to historical facts or events. These statements relate to events and depend on
circumstances that may or may not occur in the future. Forward-looking statements can be identified by the use of
forward-looking terminology, including the terms “estimates,” “expects,” “plans,” and “anticipates” or other variations
of the terms or comparable terminology.
Forward-looking statements involve inherent risks and uncertainties which may cause the actual results or performance
of the Company to be materially different from any future results or performance expressly stated or implied in the
forward-looking statements. The information herein is based on the Company’s plans, estimations and assumptions
regarding the operating environment based on conditions as of the day of the presentation. Such plans and estimates
may be modified due to changes in the Company’s strategy and the operating environment.
The Company undertakes no responsibility to update or revise the forward-looking statements. The Company and the
Company’s executives do not assume any liability for losses resulting from the use of the information herein (including
losses caused by error). This document does not constitute an invitation or recommendation to invest or otherwise deal
in, or an offer to sell or the solicitation of an offer to buy or subscribe for, any security. The information contained
herein shall not serve as the basis or grounds for related deals and agreements or investment decisions.