Press Release

⊆ In household products, LG H&H earned its best quarterly sales in five years as sales and operating profit rose 14.8 percent and 30 percent, respectively, from the year-ago period. The business results provide evidence that the company’s household products have begun to take on a sturdy growth. Strategic focus on differentiated premium products is likely to encourage a continued rise in sales.

⊆ In cosmetics, sales improved 18.3 percent and operating profit rose 26.7 percent.

⊆ In beverages, sales climbed 12.8 percent and operating profit soared 62.7 percent.

LG Household & Health Care (LG H&H) reported third-quarter business results today. According to the report, sales at headquarters amounted to 413.6 billion won ($357.6 million), up 16.1 percent from the same period a year ago. Operating profit rose 28.9 percent to 60 billion won ($51.8 million) (see Attachment 1 for further information).

Sales, operating profit and net profit shot up to record highs during the three months through September. LG H&H has reported double-digit year-over-year increases in operating profit for 19 consecutive quarters since the first quarter of 2005. Sales have continued to climb, as well, for 17 quarters in a row since the third quarter of 2005 (see Attachment 2 for further information).

In household products, cosmetics, and beverages, operating margin reached 14.7 percent, 14.1 percent and 11.2 percent, respectively―the best third-quarter results in five years (see Attachment 3 for more details).

At the Coca-Cola Beverage Company―LG H&H’s beverage operations, consolidated sales gained 14.8 percent to 600.6 billion won ($519.3 million) and operating profit jumped 30 percent to 72.3 billion won ($62.5 million), compared with the same period last year.

Household Products Begin to Take on Sturdy Growth

The most remarkable result achieved in the third quarter was the substantial rise in sales of household products, whose sales growth had been slower than cosmetics and beverages.

Sales of household products shot up to 267.2 billion won ($231 million), a 14.8 percent jump over the same period last year and the fastest advance in five years. Operating profit soared 30 percent to 39.4 billion won ($34 million), and operating profit margin increased to 14.7 percent, the highest figure for the third quarter among the company’s three key divisions.

The significantly improved performance was mainly driven by sharp increases in older household brands in addition to the robust growth of the eco-friendly body care brand Beyond (45%) and sanitary napkins (48%). Among the older household brands whose sales soared in the third quarter were Elastine (34%), Perioe (15%), Say (45%), Tech (14%), Jayeonpong (30%) and Saffron (31%).

Much of the growth stems from strong sales of premium products whose design, fragrance, as well as performance, have been improved after years of heavy investment. For example, the recently released fabric softener sheet Saffron Aroma Sheet and the laundry detergent sheet Tech Sheet are gaining ground in the market.

LG H&H explained that the significant progress resulted from the company’s consistent focus on offering premium products in spite of the economic downturn experienced since last year, and consequently, the heated competition among manufacturers to sell at the lowest prices.

The company is expecting better results in household goods for the coming quarters as it has built a proactive and creative corporate culture that focuses on quickly identifying and responding to changing consumer needs based on its years of experience in the household goods market.

Meanwhile, in cosmetics, third-quarter results were boosted significantly by the steady growth of prestige brands coupled with the successful upward brand extension of mass-market products. Sales rose 18.3 percent from the same period last year to reach 146.5 billion won ($126.6 million) and operating profit swelled 26.7 percent to 20.7 billion won ($17.8 million).

The beverage division, as well, fared much better during the July-September quarter than the year-ago quarter thanks to the extensive range of beverage brands, the addition of many new products to its portfolio, and the expansion of distribution channels. Sales increased 12.8 percent to 170.7 billion won ($147.6 million) and operating profit shot up 62.7 percent to 19.2 billion won ($16.6 million).