Building More Possibilities
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BUILDING MORE POSSIBILITIES 2011 ANNUAL REPORT Global Leading Offshore& Shipbuilding Company Introduction Review of Operations 03 20 28 Corporate Profile LNG/LPG Carriers Cruise & Ferries 04 22 30 Message from the Chairman VLCC & Product Tankers Offshore 06 24 32 Message from the CEO Containership STX Dalian 08 26 34 Board of Directors VLOC & Bulk Carriers STX Global Shipyards 10 Executive Officers 12 Creating New Frontiers STX Offshore & Shipbuilding has played a leading role in the development of the nation’s shipbuilding industry based on extensive experiences, cutting-edge shipbuilding technologies and world’s highest productivity. The company has capability and specialty to build high value-added vessels such as LNG carriers, ultra large containerships and VLCCs, and its outstanding products and advanced technologies have been recognized by its customers in the world. Our leadership is being also magnified in the fields of offshore facilities such as drilling rigs, FSUs, offshore pipe layers and LNG FPSOs and special vessels such as dredgers and dumping vessels. STX Offshore & Shipbuilding has capability to build all types of ships by full-scale operation of its global production network linking Korea, China and Europe, which has driven the company for another takeoff toward the world’s best shipbuilding base. Financial Section & Others 36 Financial Section 100 Affiliates 102 Global Network 04 Message from the Chairman STX will effectively respond to the ever-changing business environment and lay the foundation for creating new opportunities by pursuing stable growth through responsible and substantial management. STX Offshore& Shipbuilding 2011 annual report 05 Dear shareholders and customers, I would like to express my grateful thanks to all of you who have Fourth, we will lay a foundation for achieving ‘Vision 2020.’ supported STX Group. The key to reach our vision ‘USD100 billion in sales’ and ‘the In 2011, STX Group achieved KRW30 trillion in new orders world best company’ is forming the groundwork for sustainable and KRW30 trillion in sales via full-fledged growth of overseas growth by boosting efficiency of ongoing businesses and yards, expansion of the plant business in the Middle East and developing new markets. Based on successful inroads into successful development of energy and resources in the world the new markets, we will keep expanding our boundaries in despite the global economic recession and the European the resource, energy and plant businesses which are the new sovereign debt crisis. growth engines of the group. On top of that, we will focus on improving the fundamentals as a heavy industry company It is expected that many difficulties will be ahead us this year through continuous innovation of management structures in due to continued European fiscal crisis and uncertainties of the the shipbuilding and engine business parts global economy. However, every member of STX is determined to practice ‘responsible management’ with a sense of ownership Finally, STX will accelerate its efforts to cultivate human to turn a crisis of a fast changing business environment into an resources for the future. opportunity and stands tall in history as a winner. For a better future of the group, we will establish education STX Group set ‘stable growth through internal advancement’ as and training system and develop corporate culture to ensure its management policy of 2012 and suggested 5 strategies to talented people of STX can express their ability to the fullest in achieve this goal. their own positions with a sense of pride and expertise. First, we will devote our efforts to new orders and marketing. “ Special achievement requires special preparation.” Winning orders and promoting sales are prerequisites to In 2012, STX Group will implement the above 5 strategies while securing a foundation for constant growth. STX will make striving for the best result through meticulous preparation and utmost efforts to meet new order target with enhanced sales getting ready for the worst. We will do our best to achieve the power by inputting all possible resources and competence goal ‘KRW43 trillion in new orders, KRW33 trillion in sales and while we focus on pioneering strategic markets. KRW1.1 trillion in operating profit.’ Second, we will concentrate on improving profitability We are very grateful for your support and consideration. We through innovation of management efficiency. wish you and your family good health and happiness. All employees and executives will attempt to innovate and streamline our business process to raise efficiency and profitability. Third, we will strengthen the group’s competitiveness in manufacturing. We believe the core competence of STX Group lies in its manufacturing competitiveness. Based on thorough understanding of customers, we will figure out their needs and improve our manufacturing system and technological capacity. STX will ensure every single step is aligned with providing products and services to customers at the best quality Chairman Duk-Soo, Kang 06 Message from the CEO We will manage the company with principles of survival and change, and focus on improving fundamentals and foster new businesses to cope with current unfavorable market conditions. STX Offshore& Shipbuilding 2011 annual report 07 To our valued shareholders and customers! by our capability in terms of cost and technology. Moreover, we will strive to enhance profitability through strengthened I would like to extend my deepest gratitude for your productivity and business process efficiency. unwavering interest and support for the development of STX Offshore & Shipbuilding. Second, our mid- to long-term growth platform will be reinforced by high growth potential businesses. We will expand With the goal of making a new leap forward as a company offshore plant and green ship businesses in preparation against specialized in large vessels and offshore plants, STX Offshore the trend of high oil prices. Our progress to launch the cruise & Shipbuilding has focused on building high value-added ship business will be accelerated as well. We plan to achieve products such as VLCCs, ultra-large containerships and drill success in new businesses in the initial stage by differentiating ships in 2011. As a result, our sales increased by 8.3% over the products and technology. previous year to KRW4.27 trillion. Last, a corporate culture of safety, ethics and trust will be built. However, the external and internal business environment Every executive and employee will participate to realize an remains unfavorable due to the fiscal crisis of advanced accident-free workplace. Furthermore, we will raise awareness countries and uncertainty of the global economy. The on the importance of compliance and encourage participation number of new shipbuilding orders has decreased, and the of every member of the company to enable ethical exchange rate and raw material prices are unstable. Yet, we management and co-prosperity. have overcome difficulties and risks in the past through efforts including business diversification, entry into new markets Under the above business strategies, we will strive to attain the and technological development. An unprecedented level of goal of USD 7.0 billion in new orders and KRW 4.2 trillion in sales difficulty in the environment is expected in 2012, but we will in 2012. make swift and proactive response by leveraging the growth I would like to thank our shareholders and customers for your platform, can-do spirit and commitment to innovation. continued interest and support once again, and wish for good In 2012, the company will focus on strengthening its luck at your home and for your business. fundamentals to surmount the crisis of a market recession and Thank you. nurturing new growth engines under the principle of ‘survival and change’. To this end, first, we will concentrate further on securing core competitiveness. Recently, we are faced with fierce competition while a long-term recession in the shipbuilding market is predicted. In order to lead the market under such circumstance, we need to not only improve but implement a fundamental innovation of our competence in all sectors. With the top priority on reaching USD 7.0 billion in new orders in 2012, the company will upgrade competitive edge, buttressed President & CEO Sang-Ho, Shin 08 Board of Directors BoaRD OF DIRectoRS The primary role of our Board of Directors is to oversee how management serves the interests of shareowners and other stakeholders. Our Board of Directors plays a critical role in ensuring the ongoing integrity, transparency and long-term strength of STX Offshore & Shipbuilding. STX Offshore& Shipbuilding 2011 annual report 09 Duk-Soo Kang Sang-Ho Shin Chairman President Tae-Jung Kim Yon Yun Vice President Independent Director Yun-Woo Lee Tae-Sung Chung Independent Independent Director Director Woon-Oh Jung Jwoong-Sik Koh Independent Independent Director Director 10 Executive Officers EXECUTIVE OFFICERS Duk-Soo Kang In-Sung Lee Kyung-Jin Hong Chairman Vice Chairman Vice Chairman Seong-Deug Do Tae-Ho Park No-Sik Kim Jung-Hyung Lyu Kwang-Gi Lo Vice President Vice President Vice President Vice President Executive Director Cheon-Soo Han Joon-Ho Park Ho-Sung Kim Jong-Chil Do Young-Il Han Executive Director Executive Director Executive Director Executive Director Executive Director Jung-Chul Cho Myeong-Seob Koh Seok-Soo Kim Ki-Joon Pyo Yong-Kwan Han Managing Director Managing Director Managing Director Managing Director Managing