LG Household & Health Care Results for 2Q 2010 LG HOUSEHOLD - - PowerPoint PPT Presentation

LG Household & Health Care

Results for 2Q 2010

LG HOUSEHOLD & HEALTH CARE

HEALTHY BEAUTIFUL REFRESHING

July 27, 2010

CONTENTS

• Total Company (Sales, Operating Profit, Net Profit)
• Operating Profit and Operating Profit Margin Trend
• Results by Business
• Healthy
• Beautiful
• Refreshing / Others
• Summary Financial Statements (K-IFRS)

Starting from 2010, LG H&H earnings releases will be under K-IFRS. Audit of these results is still in progress. Figures in this disclosure are subject to change during the auditing process.

Total Company (Sales, Operating Profit, Net Profit)

Total company in 2Q 2010 delivered 705.8 bn won in sales (28.6% growth yoy), 85.5 bn won in operating profit (47.5% growth yoy), and 58.6 bn won in net profit (54.8% growth yoy) showing solid growth across all businesses.

2Q 2010 Results (K-IFRS) 5-Year Trend

(Unit: bn won)

2Q Sales 2Q Operating Profit (OPM) 2Q Net Profit

(Unit: bn won)

2Q 2009 2Q 2010 Increase Sales

548.9 705.8 28.6%

Operating Profit

58.0 85.5 47.5%

Recurring Profit

54.4 77.9 43.3%

Net Profit

37.9 58.6 54.8% 06 07 09 08 47.5% 10 58.0 85.5 18.4 26.0 41.3 06 07 09 08 54.8% 10 37.9 58.6 10.2 15.5 27.3 10.6% 12.1% 7.5% 9.6% 8.5%* 28.6% 06 07 09 08 10 548.9 705.8 244.6 272.4 483.6

* With the acquisition of the Coca-Cola Beverage, total OPM temporarily dropped due to change in sales mix (2Q 2008 CCB OPM: 8.2%) 2006-2007: K-GAAP Non-Consolidated, 2008: K-GAAP Consolidated, 2009~2010: K-IFRS

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Operating Profit and Operating Profit Margin Trend

Operating profit and operating profit margin for all business units have been trending up over the past five years. On a yoy basis, divisional operating profit increased 16.5% in healthy, 99.5% in beautiful, and 17.0% in refreshing, reaching

• perating profit margins of 8.3% in healthy, 16.2% in beautiful, and 12.0% in refreshing.

HEALTHY

Operating Profit/OPM

(Unit: bn won, %)

BEAUTIFUL

Operating Profit/OPM

(Unit: bn won, %)

REFRESHING

Operating Profit/OPM

(Unit: bn won, %)

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* 2006~2008: K-GAAP Non-Consolidated, 2009~2010: K-IFRS 06 9.0 07 12.5 08 13.4 09 17.0 10 19.8 06 9.9 07 13.5 08 18.3 09 21.4 10 42.7 11.1 12.9 13.8 12.5 16.2 06 5.8 07 7.4 09 19.5 10 22.9 08 11.5 4.1 5.3 11.8 12.0 8.2 5.7 7.2 6.9 8.0 8.3

HEALTHY

Healthy

2010 2009

(Unit: bn won)

Operating Profit

Operating profit increased 16.5% yoy to 19.8 bn won, and

• perating profit margin reached 8.3%.

Sales grew 12.6% yoy, reaching 238.9 bn won due to high-growth

• f premium brands despite fierce price competition.

Hair care category grew by 33% yoy with strong growth of premium line ‘I Hee Care for Style’. Skin care category grew by 34% yoy due to strong growth of Beyond (59% growth yoy). Also, Unicharm, which is about 10% of total healthy business unit, grew 25% yoy, and operating profit is also showing rapid growth. In particular, sanitary napkin brand Sofy Bodyfit grew across all channels, reaching 17.2% MS (2.2%p growth yoy). Although channels are rapidly changing, the company was able to show steady growth in sales and operating profit by: (1) continuously introducing differentiated products that satisfy consumers’ various needs, and (2) maintaining sales strategy to focus on the point of sale.

+16.5% 19.8 17.0

(Unit: bn won)

Sales 212.0

2009 2010

+12.6% 238.9

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BEAUTIFUL

Beautiful

2010 2009

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Operating profit increased 99.5% yoy to 42.7 bn won, and operating profit margin reached 16.2% with 3.7%p improvement yoy. Sales grew 55.1% yoy, to 264.9 bn won. Prestige segment sales increased due to steady growth of OHUI and Whoo, and rapid 88% growth of fermented concept brand, SU:M. SU:M’s high and stable growth is due to continuous building of its presence in the prestige channels, including door-to-door, and through addition of counters in department stores and duty free shops. In the masstige segment, oriental herbal medicine concept brand Sooryehan launched ‘Mibaek’ line to strengthen the product line-up for the summer season. IsaKnox also launched an additional whitening line, ‘IsaKnox White Symphony’ for the summer season. Multi-brand cosmetics shop Beautiplex added 46 shops in 2Q, reaching 1,052 shops in total. In the mass segment, THEFACESHOP sales increased 12.6% yoy to 74.3 bn won, and operating profit increased 25.7% yoy to 13.1 bn

• won. Growth was led by: (1) strong growth of new products

incorporating LG HH technology, such as sun-block and BB cream products, and (2) the addition of 69 locations in 2Q alone to reach more than 800 stores in total. (Unit: bn won)

+99.5% 42.7 21.4 Operating Profit

(Unit: bn won)

264.9 170.8

2009 2010

+55.1% Sales

(Unit: bn won)

2Q ‘09 2Q ‘10 77.1 89.6 2Q ‘09 2Q ‘10 2Q ‘09 2Q ‘10 66.1 74.3 75.7 81.9 +16% + 13% +8%

Prestige Sales Masstige Sales Mass Sales

OHUI, Whoo, SU:M, Chungyunjin IsaKnox, LacVert, Sooryehan, Vonin THEFACESHOP

REFRESHING

Operating profit increased 17.0% yoy to 22.9 bn won, and

• perating profit margin reached 12.0%.

Sales grew 15.0% yoy to 191.0 bn won as the major brands, as well as new non-carbonated brands, showed strong growth. Carbonated beverage sales grew 6.5% yoy with stable growth of the Coca-Cola brand. Non-carbonated beverage sales grew 38.0% yoy due to strong growth of big brands, such as Powerade and MinuteMaid, and new

• brands. Georgia Coffee grew 74.5% yoy through launching various

differentiated products, and Glaceau rapidly grew to reach 8.5 bn won in sales in 2Q. The non-carbonated beverage makes up 33%

• f the total sales, and the strong growth of non-carbonated

beverage is strengthening the brand portfolio. In the strategically important water category, Vio Jeju V Water is growing steadily. Newly launched environmentally friendly concept Vio Soonsoo, with 22% less PET used in bottles, is being accepted in the market well.

Refreshing

2010

+17.0% 191.0 166.1

2009 2010

22.9 +15.0%

2009

19.5

(Unit: bn won) (Unit: bn won)

Operating Profit Sales

New businesses that are in the process of restructuring and reformulating business strategies, such as Danone, Diamond Water, and Hankook Beverage, are under “Others”. The new businesses will be consolidated into the appropriate business units about one year after being under LGHH management.

Others

Sales Operating Profit 11.0 bn won 0.1 bn won

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Summary Financial Statements (K-IFRS)

Total company’s debt-to-equity ratio at the end of 2Q 2010 is 158%, improved from 172% at the end of 1Q 2010. Considering cash flow in 2H, the debt-to-equity ratio at the end of the year is estimated to be below 130%. Also, considering the value of the company’s treasury shares (333.9 bn won in market value at the end of 2Q 2010), the debt-to-equity ratio at the end of 2Q is 89%.

Income Statement Balance Sheets

(Unit: bn won) 2009 2010 2009 2010 Sales 549 706 1,091 1,377 COGS 264 336 524 646 Gross Profit 285 370 567 730 SG&A and Others 227 284 442 552 Operating Profit 58 85 125 179 Non-Op. Gain/Loss

• 4
• 8
• 8
• 14

Recurring Profit 54 78 116 164 Income Tax 17 19 34 42 Net Profit 38 59 82 123 2Q 1H

(Unit: bn won) 2009 Year-end End of 2Q 2010 Assets 1,299 1,900 Cash & Cash Equivalent 34 49 Accounts Receivable 221 276 Inventories 161 204 PPE 861 1,318 Intangible Asset 226 666 Liabilities 644 1,163 Accounts Payable 134 175 Other Payables 111 166 Borrowings 377 553 Short Term Borrowings 326 204 Long Term Borrowings 51 350 Total Shareholders' Equity 654 737 Shareholders' Equity 89 89 Capital Surplus 97 97 Accumulated Other Comprehensive Income

• 2

Retained Earnings 491 569 Capital Adjument

• 72
• 72

Minority Interest 51 54 6/6