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3Q Sales Report: Increase in Sales, Decrease in Operating Income

This unaudited report highlights the 3Q sales increase of 5% QoQ to KRW 273bn, but notes a year-on-year decrease due to the slow recovery in domestic demand. Operating income increased 53% QoQ but decreased 42% YoY, mainly due to fierce competition. Household products and cosmetics showed mixed performance.

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3Q Sales Report: Increase in Sales, Decrease in Operating Income

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  1. 2003 3Q Results (unaudited) * This report has been prepared on an unaudited basis and may be subject to changes.

  2. Sales Due to seasonal factors, 3Q sales increased by 5% quarter-on-quarter to reach KRW 273bn. Sales decreased year-on-year, however, given that the recovery in domestic demand has yet to materialize. Quarter-on-Quarter Year-on-Year (KRW bn) (KRW bn) 847.6 272.5 819.3 260.8 4.5% ▽3.3% 292.0 272.5 ▽6.7% Jan.~Sept. 3Q 3Q Jan.~Sept. 2003 2Q 2003 3Q 2002 2003 1 / 7

  3. Operating Income (Margin) 3Q operating income increased 53% q-o-q but decreased 42% y-o-y, mainly due to fierce competition, amounting to KRW 21bn. Year-on-Year Quarter-on-Quarter (KRW bn) (KRW bn) 21.3 (7.8%) 95.4 (11.3%) 59.9 (7.3%) ▽37.2% 13.9 (5.3%) 53.2% 37.0 (12.7%) 21.3 (7.8%) ▽42.4% Jan.~Sept. 3Q 3Q Jan.~Sept. 2003 2Q 2003 3Q 2002 2003 2 / 7

  4. Household Products In spite of the slowdown in the six major products market and more intense competition, 3Q sales and operating income increased q-o-q largely as a result of seasonality. Market Share Sales & Profit (%) (KRW bn) [2002] 19 19 49 3Q 2002 2003 20 20 q-o-q y-o-y 46 [2003 1H] L G 47 Aekyung 20 Pacific 19 Toothpaste [2003] (Jan.~Sept.) Others Sales Gross Profit (G.P. Margin) Operating Income (O.P Margin) 200.0 86.4 (43.2%) 24.6 (12.3%) 17.1% 29.9% (4.3%P) 196.4% (7.4%P) 201.6 86.5 (42.9%) 28.7 (14.2%) ▽0.8% ▽0.1% (0.3%P) ▽14.3% (▽1.9%P) 18 12 28 19 15 17 13 29 18 17 Unilever 17 L G 30 P&G 17 Pacific 16 Aekyung 13 Shampoo Others 37 16 14 10 36 16 16 11 37 16 16 9 L G 37 Pacific 16 Unilever 15 CJ 11 Soap Others 37 27 22 35 25 23 y-o-y Jan.~Sept. 2002 2003 L G 36 L G 35 Aekyung 26 CJ 23 Laundry Detergent Others Sale Gross Profit (G.P. Margin) Operating Income (O.P. Margin) 561.9 233.9 (41.6%) 63.5 (11.3%) 564.0 230.7 (40.9%) 51.6 (9.1%) 0.4% ▽1.4% (▽0.7%P) ▽18.7% (▽2.2%P) 44 33 15 42 32 17 L G 41 Aekyung 32 CJ 17 Kitchen Detergent Others 31 49 15 30 31 49 50 16 14 기타 L G 31 Pigeon 50 Oxy 13 Fabric Softener Others 3 / 7

  5. Cosmetics The ongoing downturn in the specialty shop and new door-to-door channels and investment to develop the premium channel led to weak performance. Sales by Channel Sales & Profit (KRW bn, %) (KRW bn) 3Q 2002 2003 q-o-q y-o-y 260.8 382.6 Sales Gross Profit (G.P. Margin) Operating Income (O.P Margin) 72.6 50.7 (69.8%) ▽3.3 - Exports, Home Shopping, Online, etc. ▽22.1% ▽23.5% (▽1.3%P) - - 93.6 66.5 (71.0%) 6.7 (7.2%) ▽22.4% ▽23.8% (▽1.2%P) - - 16 Others 14 24 26 Old & New Door-to-door Department Store Premium Market 62 58 y-o-y Jan.~Sept. 2002 2003 Discount Store Specialty Shop Sale Gross Profit (G.P. Margin) Operating Income (O.P. Margin) ▽13.3% ▽13.3% - ▽72.2% (▽7.0%P) 259.1 184.5 (71.2%) 8.3 (3.2%) 298.9 212.9 (71.2%) 30.4 (10.2%) Mass Market 2002 (Full Year) 2003 (Jan.~Sept.) 4 / 7

  6. Financial Highlights Although sales and profit recorded a decrease y-o-y, debt-to-equity ratio has improved since end-FY ’02. P/L Summary P/L Summary B/S Summary (KRW bn) (KRW bn) 2003 2002 % FY ’02 Jan.~Sept. % ’03 3Q 819.3 406.2 413.1 353.2 59.9 58.7 41.3 847.6 406.2 441.4 346.0 95.4 92.4 64.9 Sales Cost of Sales Gross Profit SG&A Operating Income Recurring Profit Net Profit Assets Fixed Liabilities Long-term Shareholders’ Equity Debt-to-Equity Net Debt-to-Equity 678.1 435.4 406.9 79.1 271.2 150% 53% 684.7 411.0 402.1 61.6 282.6 142% 48% 49.6% 47.9% 52.1% 50.4% 43.1% 40.8% 7.3% 11.3% Borrowings (Net Borrowings) 7.2% 10.9% 175.5 173.0 (144.8) (135.8) 7.7% 5.0% 5 / 7

  7. Quarterly Results (KRW bn) 2003 3Q q-o-q 2003 3Q y-o-y 3Q 2002 1Q 2Q 2003 1Q 2Q 3Q Total 4.5% 4.1% 53.2% ▽6.7% ▽9.6% ▽42.4 % Sales Gross Profit Operating Income 283.5 147.1 33.2 272.1 142.9 25.1 292.0 151.4 37.0 285.9 144.9 24.7 260.8 131.4 13.9 272.5 136.8 21.3 Household Products ▽0.8% ▽0.1% ▽14.3% 17.1% 29.9% 196.4% Sales Gross Profit Operating Income 185.5 75.5 20.3 174.8 71.9 14.5 201.6 86.5 28.7 193.2 77.8 18.7 170.8 66.5 8.3 200.0 86.4 24.6 Cosmetics ▽22.4% ▽23.8% - ▽22.1% ▽23.5 % - Sales Gross Profit Operating Income 104.7 73.8 13.0 100.6 72.6 10.7 93.6 66.5 6.7 93.4 67.5 5.9 93.2 66.3 5.7 72.6 50.7 ▽3.3 6 / 7

  8. 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 limited to, such factors as general economic conditions, foreign exchange fluctuations, and any change in the relevant laws and regulations. www.lgcare.co.kr www.careshop.co.kr

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