■ Company enters growth phase in full swing based on firm foundation built through restructuring initiatives

■ Steady growth of current premium products as well as successful launch of new differentiated products are key

■ Strong, steady growth expected from premium brands’ presence in China (OHUI/Whoo, ISA KNOX, and Bamboo Salt Toothpaste)

Regarding its first quarter performance, LG Household & Health announced that it achieved 302.9 billion won in sales and 40.5 billion won in operating profit, a record high quarterly performance.

LG H&H officials explained that as its restructuring efforts over the past two years are now being successfully completed, a firm foundation enabling long-term growth has been laid. As a result, the company is now entering a new phase aimed at bringing growth to a higher level through innovation. Higher than expected performance in the first quarter, which may be considered as the first step toward such a phase, is significant as it indicates that the company has successfully entered the innovation stage and begun to realize long-term growth. In particular, strong performance in overseas business and new business areas boosts strength for achieving the company’s mid-to-long-term goals.

▲ In its household goods division, a growing share of premium products in sales (43.1% → 67.3%), which have been pushed forward over the past two years, and the reduction of discount rates are the main reasons for an 11.6 percent growth in operating profit. Sales increased by 7.7 percent compared to the same period the previous year, thanks to steady sales growth of current high-end products (Bamboo Salt, Beyond, ReEn, and others) and the successful launch of new differentiated products (OPA, Perioe Whitening Effect Pen, Safe Germinated Unmilled Rice, Tech Tromm, and more).

▲ In cosmetics, owing to the continued growth of premium brands, such as OHUI and Whoo, and the high-end strategy of currently marketed brands, such as SooRyeHan Hyo, a fermented cosmetic product, and ISA KNOX Cellience, operating profit increased by 72.6 percent year-on-year.

Sales rose by 23.1 percent with strong momentum from the successful launch of product lines targeting customers in the over-40 age group (Whoo Jinyul and OHUI The First), and strong growth of brands already on the market.

In addition, based on their distinctive features, premium green tea brand Lu: and health functional food brand Cheongyunjin, both newly launched on the market last year, have secured firm positions in the market quickly based on their distinctive features, and are accepted as a new growth engine.

▲ In overseas business, Chinese and Vietnamese subsidiaries achieved 22.4 billion won in sales in the first quarter, a 34.1 percent year-on-year growth, and succeeded in a business turnaround generating 570 million won in operating profit. This is attributable to a smooth shift of focus to premium products. As the sales of premium cosmetics (OHUI/Whoo and ISA KNOX) launched last year continued to grow rapidly, a share of high-end brands in sales exceeded 30 percent.

In addition, the number of these brand stores opened in department stores is soaring (OHUI/Whoo 5→35, ISA KNOX 0→148). Also, after opening, each store has reached its break-even point quickly. The Chinese subsidiary is now able to achieve continued growth in the future with funds generated on its own. In the Vietnamese market as well, the focus is shifting toward premium products.

The household goods division also reached its break-even point as a result of sales growth and rapid profitability improvement. In particular Bamboo Salt toothpaste, firmly positioned as a premium brand, is growing fast in Beijing, capturing over 10 percent market share although it is priced more than 10 percent higher than other well-known multi-national brands such as Crest or Colgate.