Press Release

■ Sales increased 23.8 percent and operating profit soared 39.6 percent over the same period of the previous year (K-IFRS basis).

■ Despite a heavier interest burden from the acquisition of THEFACESHOP, LG H&H’s net profit this year went up 45.1 percent, compared with the same quarter last year.

■ LG H&H showed solid operating profit growth across all business segments: 18.9 percent in household goods, 70.2 percent in cosmetics, and 14.1 percent in beverages.

LG Household & Health Care (LG H&H) announced its first quarter earnings report today. According to the report prepared in accordance with the Korean International Financial Reporting Standard (K-IFRS), sales went up 23.8 percent year-over-year to reach 671 billion won ($603.4 million) and operating profit increased 39.6 percent year-over-year to 93 billion won ($83.63 million). Consolidated operating profit margin enhanced 1.6 percentage points to 13.9 percent for the January-March quarter this year from 12.3 percent in the year- ago quarter.

In short, LG H&H delivered record-high quarterly earnings in sales, operating profit and profit margin.

Quarterly Performance by Division

▲ Household Products:

The household goods division is experiencing a rapid growth as the sales of new items like the sanitary napkin brand Body Fit and the bath and body brand Beyond maintain an upward trend. In addition, the company’s premiumization strategy has proved successful, facilitating further growth. As a result, sales stood at 272.3 billion won ($244.8 million) and operating profit at 34.7 billion won ($31.2 million), up 14.2 percent and 18.9 percent, respectively, from the same period a year earlier.

The items that have driven the growth of the household products are the sanitary napkin brand Body Fit and the total beauty brand Beyond. With growing brand awareness and enhanced product functionality, Body Fit recorded a 40 percent sales increase and expanded its market share from 13.9 to 16.6 percent. Meanwhile, Beyond posted a 43 percent increase in sales as the company has diversified its product lines to include kids products and fermentation-based body care items.

The yogurt business, initiated by LG H&H in the second half of last year in a strategic alliance with Danone, is gaining a strong foothold in the market. Differentiated items are appealing to consumers as in the case of I Hee Care for Style, a specialized hair care brand developed by experts.

▲ Cosmetics: The cosmetics division showed strong earnings with the help of acquisition effects of THEFACESHOP, combined with robust growth in its higher-end brands. Sales surged 44.2 percent to 256.9 billion won ($231 million) while operating profit shot up 70.2 percent to 47.2 billion won ($42.44 million). Operating profit margin improved 2.8 percentage points to 18.4 percent.

Sales of well-established prestige brands (e.g. O HUI, Whoo, SU:M) and masstige brands (e.g. ISA KNOX, LacVert, SooRyeHan, VONIN) have continued a steady upward trend while newly released biotech cosmetics O HUI The First and ISA KNOX TE’RVINA have been consolidating their positions as pacemakers in the cosmetic market since their release early this year.

The mass-market brand THEFACESHOP has had a rapid rise in sales boosted by benefits accruing from the acquisition. Since acquired by LG H&H, the mass-market cosmetics brand has launched a new sunblock, a combination of THEFACESHOP’s brand and LG H&H’s advanced technologies, and has opened 16 additional outlets nationwide. In the first quarter, THEFACESHOP’s sales totaled 64.2 billion won ($57.73 million) with a 3.9 percent increase and operating profit reached 11.5 billion won ($10.34 million) with a 19.5 percent increase, compared with the first quarter last year. The low-end cosmetics brand is expecting even better results in the second quarter.

▲ Beverage:

Sales in the beverage business jumped 12.9 percent year-on-year to 141.7 billion won ($127.4 million) and operating profit increased 14.1 percent to 11.1 billion won ($9.98 million) with the successful introduction of new flavors and packaging, and the expansion of distribution channels in the ready-to-drink (RTD) market.

Specifically, mini Coke, DK and Fanta released in new small cans or bottles, Glaceau Vitamin Water in new packaging and Georgia Coffee with new flavor and packaging are being well received by consumers.

In its beverage operations, LG H&H is expanding its revenue sources by broadening its distribution channels in the growing RTD market while making efforts to develop new items suitable for each channel.