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 Net Profit 2Q Operating Profit (Unit: bn won) 2Q 2009 2Q 2010 Increase (OPM) 12.1% 705.8 9.6% 10.6% Sales 548.9 705.8 28.6% 8.5%* 85.5 548.9 7.5% 28.6% 483.6 Operating Profit 58.0 85.5 47.5% 58.0 58.6 47.5% 41.3 244.6 272.4 Recurring Profit 54.4 77.9 43.3% 37.9 26.0 27.3 18.4 54.8% 10.2 15.5 Net Profit 37.9 58.6 54.8% 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10 * 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 1/6

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 operating profit margins of 8.3% in healthy, 16.2% in beautiful, and 12.0% in refreshing. Operating Profit/OPM Operating Profit/OPM Operating Profit/OPM (Unit: bn won, %) (Unit: bn won, %) (Unit: bn won, %) HEALTHY BEAUTIFUL REFRESHING 16.2 12.0 8.3 13.8 11.8 8.0 12.9 12.5 7.2 6.9 5.7 11.1 8.2 42.7 22.9 5.3 4.1 19.5 19.8 17.0 21.4 13.4 12.5 18.3 11.5 13.5 9.0 7.4 9.9 5.8 06 07 08 09 10 06 07 08 09 10 06 07 09 10 08 * 2006~2008: K-GAAP Non-Consolidated, 2009~2010: K-IFRS 2/6

HEALTHY Healthy Operating Profit Operating profit increased 16.5% yoy to 19.8 bn won, and (Unit: bn won) 2010 operating profit margin reached 8.3%. Sales grew 12.6% yoy, reaching 238.9 bn won due to high-growth 19.8 of 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 +16.5% 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, 2009 reaching 17.2% MS (2.2%p growth yoy). 17.0 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 Sales consumers’ various needs, and (2) maintaining sales strategy to focus on the point of sale. (Unit: bn won) 238.9 212.0 +12.6% 2009 2010 3/6

BEAUTIFUL Beautiful Operating Profit Operating profit increased 99.5% yoy to 42.7 bn won, and operating (Unit: bn won) profit margin reached 16.2% with 3.7%p improvement yoy . 2010 Sales grew 55.1% yoy, to 264.9 bn won. 42.7 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 +99.5% through addition of counters in department stores and duty free shops. In the masstige segment , oriental herbal medicine concept brand 2009 Sooryehan launched ‘Mibaek’ line to strengthen the product line-up for the summer season. IsaKnox also launched an additional 21.4 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. Sales In the mass segment , THE FACE SHOP sales increased 12.6% yoy to 74.3 bn won, and operating profit increased 25.7% yoy to 13.1 bn (Unit: bn won) 264.9 won. Growth was led by: (1) strong growth of new products incorporating LG HH technology, such as sun-block and BB cream 170.8 products, and (2) the addition of 69 locations in 2Q alone to reach more than 800 stores in total. (Unit: bn won) +55.1% Prestige Sales Masstige Sales Mass Sales OHUI, Whoo, SU:M, Chungyunjin IsaKnox, LacVert, Sooryehan, Vonin THE FACE SHOP 81.9 89.6 74.3 75.7 77.1 66.1 +16% +8% + 13% 2009 2010 2Q ‘09 2Q ‘10 2Q ‘09 2Q ‘10 2Q ‘09 2Q ‘10 4/6

REFRESHING Refreshing Operating Profit Operating profit increased 17.0% yoy to 22.9 bn won, and (Unit: bn won) 2010 operating profit margin reached 12.0%. Sales grew 15.0% yoy to 191.0 bn won as the major brands, as 22.9 well as new non-carbonated brands, showed strong growth. Carbonated beverage sales grew 6.5% yoy with stable growth of the Coca-Cola brand. +17.0% Non-carbonated beverage sales grew 38.0% yoy due to strong growth of big brands, such as Powerade and MinuteMaid, and new 2009 brands. Georgia Coffee grew 74.5% yoy through launching various 19.5 differentiated products, and Glaceau rapidly grew to reach 8.5 bn won in sales in 2Q. The non-carbonated beverage makes up 33% of the total sales, and the strong growth of non-carbonated Sales beverage is strengthening the brand portfolio. (Unit: bn won) 191.0 In the strategically important water category, Vio Jeju V Water is growing steadily. Newly launched environmentally friendly concept 166.1 Vio Soonsoo, with 22% less PET used in bottles, is being accepted in the market well. +15.0% 2009 2010 New businesses that are in the process of restructuring and Others Sales Operating Profit reformulating business strategies, such as Danone, Diamond Water, and Hankook Beverage, are under “Others”. The new 11.0 bn won 0.1 bn won businesses will be consolidated into the appropriate business units about one year after being under LGHH management. 5/6

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 2Q 1H (Unit: bn won) 2009 Year-end End of 2Q 2010 (Unit: bn won) Assets 1,299 1,900 2009 2010 2009 2010 Cash & Cash Equivalent 34 49 Sales 549 706 1,091 1,377 Accounts Receivable 221 276 COGS 264 336 524 646 Inventories 161 204 Gross Profit 285 370 567 730 PPE 861 1,318 SG&A and Others 227 284 442 552 Intangible Asset 226 666 Operating Profit 58 85 125 179 Liabilities 644 1,163 Non-Op. Gain/Loss -4 -8 -8 -14 Accounts Payable 134 175 Recurring Profit 54 78 116 164 Other Payables 111 166 Income Tax 17 19 34 42 Borrowings 377 553 Net Profit 38 59 82 123 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 -2 0 Comprehensive Income Retained Earnings 491 569 Capital Adjument -72 -72 Minority Interest 51 54 6/6