Press Release

LG H&H Reports Record Performance in 3Q 2011 with KRW 926.8 Billion in Sales and KRW 112.1 Billion in Operating Profit

■ Sales rose by 22.1 % year-on-year, and operating profit 14.0 %.

■ Highest quarterly performance in all areas including sales and operating profit.

■ Sales has increased year-on-year for 25 consecutive quarters since 3Q 2005, and operating profit for 27 consecutive quarters since 1Q 2005.

On October 27, 2011, LG Household & Health Care (LG H&H) Ltd. (CEO: Suk Cha) announced an all-time high quarterly record for its third quarter with KRW 926.8 billion in sales, KRW 112.1 billion in operating profit and KRW 77.1 billion in net profit, which translates into year-on-year growth of 22.1%, 14.0% and 16.0%, respectively.

On a year-on-year basis, sales have risen for 25 consecutive quarters since the third quarter of 2005, and operating profit for 27 consecutive quarters since the first quarter of 2005.

The first quarter of this year saw the company’s operating profit surpassing KRW 100 billion for the first time and it has continued to stay above the mark for three consecutive quarters. Such robust growth is attributed to balanced gains in sales and operating profit across all businesses including household goods, cosmetics and beverages.

In particular, the performance of Haitai Beverage Co. Ltd, which was acquired by LG H&H in January 2011, had improved rapidly for the previous three quarters and became profitable in the third quarter with KRW 67.6 billion in sales and KRW 0.3 billion in operating profit. Thanks to the detailed synergy strategy for Haitai and Coca-Cola Beverage, Haitai Beverage successfully enhanced its utilization of manufacturing facilities, sales force and network. At the same time, the sales of its main products including Sunny-10 and Sunkist increased, contributing to the turnaround.

On an accumulated basis, sales up to the third quarter amounted to KRW 2 trillion 622.3 billion, operating profit KRW 323.2 billion and net profit 223.7 billion, gaining 22.8%, 16.7% and 18.3% year-on-year, respectively.

[3Q 2011 Results by Business]

▲ In household goods, sales increased 12.9% year-on-year to KRW 339.8 billion and operating profit 10.5% to KRW 49.3 billion. The body care category rose sharply by 22% from a year earlier, thanks to the rapid growth of the new brand ‘On: The Body.’ Sales of ‘Saffron,’ the number one fabric softener since the first quarter this year, rose sharply by 49% year-on-year and cemented its standing. Sales of ‘Unicharm’ sanitary napkins increased 28% year-on-year, continuing the upward trend.

Encouraged by the success of ‘I Hee Care for Style,’ which carved up a market for designer shampoos, LG H&H launched ‘Elastine Artist Label: I Hee,’ leading the consumer trend of segmentation and premiumization. The company also dramatically improved consumer convenience with the new product ‘Tech Aroma Gel,’ liquid laundry detergent with fabric softener properties.

▲ In cosmetics, sales increased 10.8% year-on-year to KRW 285.1 billion and operating profit 23.4% to KRW 35.4 billion. By segment, the prestige segment reported a 17% year-on-year increase in sales, driven by 12% and 40% growth of the ‘Whoo’ and ‘Su:m’ brands. Su:m, which added six department store spots, is currently operating 48 stores. The natural herbal cosmetics brand ‘Belif,’ which launched diverse product lines and opened five additional counters, also enjoyed fast growth in its 14 department store shops in Korea.

The masstige segment achieved a 7% year-on-year increase in sales, with all brands posting balanced growth. The number of Beautiplex stores reached 1,150 including 233 BeautIJ shops.

‘TheFaceShop’ gained 8% year-on-year in sales thanks to the increase in the number of its outlets at home and abroad. In particular, its newly added master franchise stores laid the groundwork for rapid growth overseas. As of the end of September, the number of TheFaceShop shops amounted to 1,408 with 950 in Korea and 458 overseas, 78 of which were in Japan.

▲ In beverages, both sales and operating profit rose sharply thanks to the robust growth of existing brands and satisfactory results from new brands. Sales rose 50.1% year-on-year to KRW 301.9 billion and operating profit 9.6% to KRW 27.5 billion. Carbonated beverage sales posted 18% growth, driven by the product diversification of the Sprite brand and improved marketing. Non-carbonated beverage sales gained 32% year-on-year with impressive performance of Georgia Coffee (+65%), Glaceau Vitamin Water (+120%) and bottled water (+36%).

New products from Georgia Coffee and Glaceau Vitamin Water were received well by the market. The outbreak of foot-and-mouth disease led to an increased demand for safe bottled water, resulting in spiked sales of the company’s bottled water from natural underground sources in Jeju, Cheolwon and Pyeongchang.

With the strategy designed to maximize synergy between Haitai and Coca-cola Beverage, Haitai Beverage enhanced its utilization of manufacturing facilities, sales force and network. After two quarters since its acquisition by LG H&H, the brand posted its first profit in the third quarter with KRW 67.6 billion in sales and KRW 0.3 billion in operating profit, thanks to the foregoing improvement and the increased sales of its main products including Sunny-10 and Sunkist.