Press Release

⊆ In household products, a steady growth of premium brands led to a 12.7 percent operating profit margin in the face of dampened consumer confidence and a strong dollar against the won.

⊆ In cosmetics, sales and operating profit gained 18.5 percent and 31.6 percent, respectively, as prestige products performed stronger and mass-market brands were successfully extended into the premium end of the cosmetics market.

⊆ In beverages, sales and operating profit went up 11.2 percent and 20.4 percent, respectively, on the back of strong sales of new products and enhanced brand equity of older brands.

LG Household and Health Care (LG H&H) reported its earnings for the January-March quarter today. According to its report, consolidated sales totaled 541.8 billion won ($400.1 million), a 12.3 percent year-over-year increase. Operating profit for the first quarter ended March 31 surged 18.5 percent to 67.9 billion won ($50.1 million) compared with the same period in 2008. Operating profit margin stood at 12.5 percent.

According to the report, LG H&H, one of the leading manufacturers and distributors of household products in Korea, delivered its best ever quarterly performance during the first three months of this year, in terms of sales, operating profit and operating margin. Operating margin continued to strengthen for the past five years to reach 12.7 percent in the household products division, 19.2 percent in cosmetics and 7.8 percent in beverage―record highs for all three businesses (see the attached “1Q Operating Profit and Operating Profit Margin Trend for 2009” for further information).

Sales and operating profit at headquarters jumped 10.2 percent and 18.1 percent year-over-year to reach 386.6 billion won ($285.5 million) and 59.6 billion won ($44 million), respectively. The figures represent the combined results of household products and cosmetics.

Quarterly Performance by Division

⊂ Household Products:

Sales and operating profit climbed 3.5 percent and 6.3 percent from the same period last year to stand at 225 billion won ($166.1 million) and 28.5 billion won ($21 million), respectively, despite price pressure caused by dampened consumer confidence and a strong dollar against the won. The company continued solid growth in household products during the first three months this year as its restructuring measures led to reduced fixed costs and its “shock-proof” strategy helped rationalize its brand portfolio.

Beyond, an eco-friendly body care brand, appealed to consumers and saw a 24 percent year-over-year increase in sales, driving the sales growth of household products. Strong results in the sanitary napkin business helped too. Body Fit sales soared 39 percent from the first quarter of 2008 and its market share increased from 11.7 percent to 13.9 percent.

In addition, the division saw a significant growth in sales of the junior cosmetics line nana’s B, which was rolled out in the second half of last year, the renewed hair care brand ReEn, and the diaper line TODIAN.

⊂ Cosmetics:

Sales rose 18.5 percent to 161.6 billion won ($119.3 million) and operating profit jumped 31.6 percent to 31.1 billion won ($22.9 million). This left operating profit margin at 19.2 percent, up 1.9 percentage points from the same period last year. The biggest contributor to the gain was the steady growth of prestige brands (e.g. O HUI, Whoo, SU:M) combined with the successful upscaling of mass-market brands (e.g. ISA KNOX, SooRyeHan, LacVert).

While the newly released SU:M (86 percent) and the renewed line LacVert (33 percent) enjoyed robust growth, other products, whose brand value has been enhanced by improvements in design and fragrance and the addition of functional lines, continued a solid growth based on expanded distribution channels.

In particular, the number of door-to-door sales people was around 9,700, up 11 percent from the end of last year. Likewise, there has been a steady rise in the share of LG H&H’s products in total sales at Beautiplex―a multi-brand chain in cosmetics―from 64 percent to 73 percent, and the number of Beautiplex outlets increased from 707 to 822. This resulted in a 27 percent year-over-year growth in sales at Beautiplex.

⊂ Beverage:

Sales and operating profit gained 11.2 percent and 20.4 percent, respectively, to 125.5 billion won ($92.6 million) and 9.7 billion won ($7.1 million) as the beverage business sought to rationalize operations by placing a greater focus on on-site business and reducing discount rates.

Sales of carbonated drinks rose 10 percent from the first quarter of 2008 based on the strong performance of the newly launched Coca-Cola Cherry and Fanta Shaker, combined with a continued growth of brand equity. In non-carbonated ready-to-drink beverages including Minute Maid and POWERADE, sales went up by 20 percent as a result of improved design and flavor.

Sales of Fanta, in particular, soared 33 percent on strong sales of Fanta Shaker, which hit store shelves in March. In addition, sales of Nestea swelled more than 49 percent with the improved packaging and newly added flavors gaining popularity among consumers.