New Initiative

1. New Initiative Clean and Beautiful

2. Highlight LG Household & Heath Care ◆ started its operation as Rakhee Chemical Industry in 1947 and has evolved as ‘a company of the Korean people’ which offers wide range of products from personal/home care products(tooth- paste, soap, shampoo, detergents, and etc.) to cosmetics, ◆ played a role as a footstep of the constant growth of LG Group including LG Chemical with dominant market position and stable earning growth, ◆ recorded annual sales growth rate of 8% and maintained operating margin of 10% despite the financial crisis(1998~2000) of Korea owing to its continuous commercialization of differentiated products supported by extensive R&D activities and total logistics which integrate production, sales, and distribution, ◆ demerged from LG Chemical as a new entity specialized in household products and cosmetics, ◆ will elevate corporate value and maximize shareholder value as a dominant player with incomparable competitiveness, and will pave the way towards a Super-Excellent Household & Health Care Company realizing customers’ dreams to be clean, healthy, and beautiful while enriching lives of consumers, shareholders, and employees, always with them.

3. Outline Ⅰ. The Company Ⅱ. Vision Ⅲ. Corporate Strategies and Growth Target Ⅳ. Business Results and Strategies Ⅴ. Financial Highlight

4. Ⅰ. The Company

5. Company Profile Established in 1947, LG H&H has positioned itself as the largest company in the domestic household products and cosmetics markets. ■ Brief History Yr 1947 Rakhee Chemical Industry established → Yr 1954Produced ‘Lucky toothpaste’ → Yr 1966Commercialized synthetic detergents → Yr 1969Went public → Yr 1974Changed corporate name to ‘Lucky’ and established Ulsan plant → Yr 1980Built Cheongju Plant → Yr 1984 Commercialized cosmetics → Yr 1995 Changed corporate name to ‘LG Chemical’ → Yr 2001Demerged from LG Chemical and established as LG H&H ■ Business Domains · Household Products : Personal Care, Home Care · Cosmetics : Basic Care, Make-up & Special Care ■ Plant : Cheongju Plant(household products, cosmetics), Ulsan Plant(household products) ■ Distribution Network : 14 warehouse centers, 180 sales agents for household products and 200 for cosmetics ■ Number of Employees : 3,400 ■ Overseas Subsidiaries · Manufacturing Subsidiary - 2 in China(toothpaste, cosmetics), 3 in Southeast Asia(shampoo, cosmetics) · Sales Subsidiary - 1 in China and 1 in USA(household products, cosmetics) · R&D Subsidiary - 1 in China(natural substance) 1/14

6. Business Domain LG H&H engages in household products and cosmetics businesses, securing market presence as the dominant leader. Major Products Major Brands ■Toothpaste ■ Soap ■ Shampoo/Conditioner ■ Diaper • ‘Bamboo Salt Urdex’, ‘Clinx’ • ‘Say’, ‘Sense’ • ‘Double Rich’, ‘Novid’ • ‘Maman’ Personal Care Household Products (Since 1954) ■Laundry Detergents ■ Kitchen Detergents(Dish-washing) ■ Fabric Softener • ‘One Scoop’ • ‘Pon Pon’, ‘Safe’ • ‘Sayfran’ Home Care & ‘LacVert’ ‘ISA KNOX’ ‘OHUI’ ‘HERCYNA’ ‘Retem’ ■Cleansing ■ Essence ■ Skin Toner/Softener ■ Cream Basic Care Cosmetics (Since 1984) ■Foundation, Powder ■ Two Way Cake, Lipstick ■ Whitening ■ Wrinkle Care Make up & Special Care 2/14

7. Results Over the past 3 years, sales has shown CAGR of 8.5% and recurring profit will surge to exceed krw 100 bn by 2001. Sales & EBITDA Recurring Profit & Margin 1,062 105 965 884 816 Sales 79 Profit (krw bn) (krw bn) 61 154 9.9 31 8.1 133 6.9 EBITDA 124 121 (krw bn) 3.7 Margin (%) ‘98 ‘99 ‘00 ‘01(E) ‘98 ‘99 ‘00 ‘01(E) 3/14

8. Core Competence From NPD* to logistics, LG H&H has been accumulating core competencies to create values and will further enhance them to be world-class. NPD Marketing Prompt development of new products supported by intense R&D Top-ranking brand equity and expanding big brand • Operate self-designed NPD Process • and 7 NPD principles • Integrate tech and brand by MGPD • - Effectuate R&D with ‘Vitality Index’ • Brand management through deep • analysis of customer and market • Carry out inexpensive marketing • as the market leader • Combine customer data and improve • advertising & promotion skills Core Competencies Customer Relations Logistics Differentiated service offering and customer satisfaction enlargement Win-Win strategy of ECR* with customers and cost reduction • Develop new services and sales promotions • as a leading company • - Implement various programs to vitalize • customer-oriented activities • (STAR, JUMP, CORE Program,and etc.) • Improve operation of infra system • (for control of inventories and cost ) • -Co-work with distributors • * ECR: Efficient Consumer Response * NPD : New Product Development 4/14

9. Ⅱ. VISION

10. Vision A Super-Excellent Household & Health Care Company to enrich customers’ lives through creating new values Vision With world best productivity and quality With highly qualified human resources of utmost market value With world class profitability and financial structure Super Excellence 6 Sigma Leadership Knowledge Management - Developing world class core competency through knowledge systematization and reproduction - Founding new business and providing high value-added products and service - Best quality in product, service, management,and human resource - Breakthrough in management innovation activities - Cultivating & taking real transformational leadership - Embodying field-based and performance-oriented culture SIGMA 21st Renovation S uper Excellence I nformatization G lobalization M anagement by Knowledge A ction Leadership 5/14

11. SIGMA 21st - Long Term Corporate Renovation Program Focus Action Plan • Combine 6 sigma with existing renovation • programs • Expand higher value added products and • big brands ◆ Rationalization ◆ Revitalization S uper Excellence ◆ Competitiveness of distribution enhanced by IT ◆ E-biz diversification • Implement ECR/DB Marketing/ERP • Launch beauty care business on the internet I nformatization • Focus on selective brands by region • Upgrade MIS of overseas subsidiary • and Global R&D network ◆ Profitable overseas business ◆ World-class management G lobalization ◆ Knowledge management ◆ Core competence enhancement M anagement by Knowledge • Facilitate infra systems to share knowledge • Accumulate best practice of key knowledge ◆ High performing culture ◆ High motivating rewards • Operate CMU/AMU • Differentiate rewards based on performance Action Leadership 6/14

12. Ⅲ. Corporate Strategies & Objectives

13. Strategies LG H&H will challenge the changes in market situation with 3 principal strategies. Customer & Market ◆ Change in consumer behavior - Diversification of customer needs - Enhanced buying power of teenagers and expansion of silver market ◆ Sluggish market growth due to depressed economy ◆ Drastic restructuring of distributors - Convenience stores on the increase - Supermarkets/Shops to be large-sized and form sales network Strategies ⅰ) Focus on profitability and cash flows ⅱ) Acquire globally-competitive core competencies ⅲ) Develop higher-value-added products and new businesses ◆ Aggressive operation of multinational companies - Household products : P&G, Unilever - Cosmetics : Shiseido, Kanebo ◆ Local makers’ selective concentration - Pacific : cosmetics, shampoo, toothpaste - Aekyung : toothpaste, detergents, cosmetics Competitors 7/14

14. CAGR 11.6% Growth Target LG H&H is aiming at sales of CAGR 11.6% and recurring margin of 13.1% by 2003. 165(12.3%) OP(Margin) 150 (11.2%) 123 (11.6%) RP(Margin) 105 (9.9%) 1,340 (krw bn) Sales 1,062 42% (krw bn) Cosmetics 38% 58% Household Products 62% 01(E) 03(E) 8/14

15. Ⅳ. Business Results and Strategies

16. Household Products ① Results Sales of household products has increased by 6.2 % p.a. and LG H&H is maintaining No.1 M/S in the domestic market. Sales Market Share (krw bn) (Year 2000) 662 • Toothpaste 624 602 L G 50.6 Pacific 18.4 Aekyung 16.8 Others 541 • Shampoo L G 28.9 Aekyung 16.5 P&G 15.0 Pacific 20.4 Others • Soap Dong San 12.5 L G 41.0 Pacific 12.7 Unilever 9.6 Others • Laundry Detergents L G 36.5 CJ 20.9 Aekyung 24.8 Others • Kitchen Detergents L G 45.6 CJ 14.4 Aekyung 32.7 Others 98 99 00 01(E) ☞ Nilson Data 9/14

17. ② Strategies Backed by strong market position, LG H&H will elevate profitability and pioneer household products market with hit brands in a stream. Secure leadership in major businesses and growing channels - Develop hit brands and accumulate brand equity throughNPD process and brand management - Expand ECR system for new distribution channels Seek growth engine for sustainable growth - Develop new categories and focus on them · junior products, hair-dyes, body cleansers, anti-depilatory agents, and etc. - Enhance wholesale distribution business · outsourcing of hit brands and strategic alliances with foreign/domestic companies Strengthen cost competitiveness - Activate TCR projects and accelerate production innovation - Reduce manufacturing costs incessantly and allocate marketing expenses efficiently 10/14

18. Cosmetics ① Results Sales has surged by 13.3% p.a. despite the financial crisis in Korea and LG H&H’s status in cosmetics market has risen to be strong No.2 player. Sales Market Share (krw bn) (krw bn) 1,910 400 1,765 Market Size 1,650 341 16.9% 282 275 LG H&H→ 15.6% 15.0% 98 99 00 01(E) 00 98 99 * Market exclusive of door-to-door sales 11/14

19. ② Strategies LG H&H will strengthen growth momentum to be No.1 player in cosmetics by expanding leading products and differentiating strategies by distribution channel. Differentiate strategies by distribution channel Enhance product leadership ◆ Attain No.1 market shares ◆ Shop - Narrow the gap between No.1 player and LG H&H - Concentrate on ‘LacVert’ and ‘ISAKNOX’ - Run clubs for shoppers 2002 Lipstick 2003 Essence 2000 Two-way Cake 2001 Wrinkle Care, Whitening ◆ Mass Market - Maintain No.1 market shares in new distributors such as large discount store - Focus on ‘Retem’ ◆ Increase ‘Big Brands’ - Over 10 brands to exceed krw 10 bn in sales respectively - ‘LacVert’, ‘ISAKNOX’, ‘HERCYNA’, ‘OHUI’, ‘Retem’, and etc. ◆ Department Store - Diversify customer DB marketing - Focus on ‘OHUI’ ◆ Sales Agent ◆ Cultivate ‘Blockbusters’ - LacVert or ISAKNOX to exceed krw100 bn in sales - Launch personalized marketing - Differentiate marketing by customer’s skin type 12/14

20. Ⅴ. Financial Status

21. Key Financials (krw bn, except per share data) 13/14

22. Debt Reduction Cash generated from business operations will be spent primarily on repayment of borrowings. Cash Flows Debt Reduction (krw bn) 219% Cash-in Debt to Equity 168% Cash-out 163 Net Cash Flows 264 114% 75 139 128 71% 186 53 78 141 88 86 Borrowings 77 (krw bn) 49 * 01(E) 02(E) 03(E) 01.1Q 01(E) 02(E) 03(E) * Excluding 1Q results 14/14

23. Thank you! This presentation contains forward looking statements which are based on management’s assumptions and estimates . The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in this presentation. Potential risks and uncertainties include, but are not limited to, such factors as general economic conditions, foreign exchange fluctuations, and any change in the relevant laws and regulations.