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2003 1Q RESULTS

2003 1Q RESULTS. Contents. Business Results 1~2 Household Products 3~4 Cosmetics 5~6 Key Financials 7.

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2003 1Q RESULTS

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  1. 2003 1Q RESULTS

  2. Contents • Business Results 1~2 • Household Products 3~4 • Cosmetics 5~6 • Key Financials 7 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. In addition, an independent auditing is not required for quarterly financial statements.

  3. Business Results – quarterly trend While displaying the seasonal trend in general, LG H&H’s operation was affected by the overall economic slowdown in 4Q, 2002. However, business results were improved in 1Q, 2003. 37.4 (12.7%) 36.1 (12.9%) 33.2 (11.7%) 29.2 (11.2%) 24.7 (8.6%) 25.1 (9.2%) 22.8 (9.4%) O.P. (Margin) 19.6 (7.9%) (KRW bn) 2.9 (1.2%) 294.1 285.9 284.8 279.5 274.1 Sales 259.6 249.3 249.0 243.8 (KRW bn) 1Q 1Q 1Q 2Q 3Q 4Q 2Q 3Q 4Q 2002 2003 2001 1

  4. Earning Forecast for 1Q, 2003 Sales of KRW 285.9bn and operating profit of KRW 24.7bn were recorded in 1Q, 2003. A sales increase of 0.4% and a O.P decrease of ∆25.6% y-o-y were observed. However, sales and profit improvements remained at a satisfactory level q-o-q. Results Analysis Earning Forecast (KRW bn) (y-o-y) • Negative market growth from weak consumption • - Household products 6 major category market: △6% • - Cosmetic market: △12% • Increased marketing cost from intense competition • - Lowered selling prices for some products • - Increased sales commissions • New products and premium brands cultivation • - Increase in advertising / packaging / sample expenses 2

  5. Household Products Results-quarterly trend The seasonality caused by the Lunar New Year & Korean Thanks Giving holidays is shown in the Household Products results. Despite the negative growth in the major product category markets, sales growth remained solid in 1Q, 2003. 28.7 (14.1%) 24.4 (12.6%) 20.3 (10.9%) 18.7 (9.7%) 17.2 (10.1%) 16.5 (10.2%) 14.5 (8.2%) O.P. (Margin) 10.3 (6.4%) 8.0 (4.8%) (KRW bn) 203.2 193.9 193.3 186.7 Sales 176.5 170.1 168.2 162.3 159.7 (KRW bn) 1Q 1Q 1Q 2Q 3Q 4Q 2Q 3Q 4Q 2003 2002 2001 3

  6. Earning Forecast for 1Q, 2003 Sales of KRW 193.3bn and operating profit of KRW 18.7bn were recorded in 1Q, 2003. A sales increase of 3.5% and a O.P decrease of ∆7.9% y-o-y were observed. However, sales and profit improvements remained at a satisfactory level q-o-q. Results Analysis Earning Forecast (KRW bn) (y-o-y) • Negative market growth from weak consumption • - Personal care market: △13% • - Home care market : 1% • Increased marketing cost from intense competition • - Advertising & promotion cost increased • New & premium brands cultivation • - Lemoning/Claren/6 strategic brands marketing expenses • increased • * Lemoning: laundry bleach • Claren : dental whitening product 4

  7. Cosmetics Results-quarterly trend Since 1Q, 2002, sales displayed a downward trend. However, sales & operating profit bounced back in 1Q, 2003. 13.0 (12.4%) 12.1 (12.9%) 11.8 (13.0%) 10.7 (10.6%) 9.7 (10.2%) O.P. (Margin) 영업이익(율) 6.7 (7.1%) 6.4 (7.5%) 5.9 (6.3%) (KRW bn) △3.1 (△3.7%) 104.8 100.8 매 출 액 Sales 93.8 95.2 93.4 94.1 91.1 85.6 82.9 (KRW bn) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2003 2001 2002 5

  8. Earning Forecast for 1Q 2003 Sales of KRW 93.4bn and operating profit of KRW 5.9bn were recorded in 1Q, 2003, a decrease of ∆10.9% & ∆54.6% respectively y-o-y. However, sales and profit improvements remained at a satisfactory level q-o-q. Results Analysis Earning Forecast (KRW bn) (y-o-y) • Negative growth of major distribution channels • - Specialty shops : △20% • - New type door to door: △34% • Continued channel shift by consumers • - Causing increased promotional expenses • New & premium brands cultivation • - Increased marketing expenses for • The Whoo / Ohui / Isa Knox brands 6

  9. Key Financials By maintaining stable cash flows and disposing non business related assets such as stake in LG Investment & Securities, borrowing of KRW 50.1bn was additionally reduced. At the end of 1Q, 2003, net borrowings to equity ratio declined to 30%. Borrowings Key Financials (KRW bn) (KRW bn) 2001 2002 1Q 2003 20.0 80.7 - 22.2 122.9 70.0 80.7 - 22.3 173.0 27.3 95.1 50.0 33.0 205.4 Short Term Current Maturities Bonds Long Term Total Borrowings 205.4 173.0 Net Borrowings (164.7) 122.9 (144.8) (78.0) 2001 2002 1Q, 2003 7

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