LG Household & Health Care

Transcription

1 LG Household & Health Care 2009 Earnings Report HOUSEHOLD COSMETICS BEVERAGE January 26, 2009

2 CONTENTS 2009 Sales and Operating Profit Total Company Operating Profit and Operating Profit Margin Trend by Division Household Cosmetics Beverage 2009 Sales and Operating Profit 2009 Sales and Operating Profit by Division Summary Financial Statements 2010 Business Plan Audit of these results is still in progress. Figures in this disclosure are subject to change during the auditing process.

3 2009 Sales and Operating Profit Total Company Total company s 2009 sales increased 13% yoy, reaching 1,525.1 bn won on the back of solid growth across all divisions. Operating profit grew 29% yoy, reaching bn won driven by better sales mix resulting from robust growth of premium products, as well as improved economies of scale enabled by steady top-line expansion Results 5-Year Trend 2009 Increase Sales 1, , % Operating Profit % Recurring Profit % Sales 1, , , , % Operating Profit % Net Profit % /9

4 Operating Profit and Operating Profit Margin Trend by Division In each division, full-year operating profit, as well as operating profit margin, have reached all-time highs. On a yoy basis, divisional operating profit increased 24.5% in household, 34.1% in cosmetics, and 48.5% in beverage. Notably, household growth rates in sales and operating profit have become comparable to that of other divisions, with all three divisions posting substantial gains. Operating Profit/OPM (Unit: bn won, %) Operating Profit/OPM Operating Profit/OPM (Unit: bn won, %) (Unit: bn won, %) HOUSEHOLD COSMETICS BEVERAGE /9

5 Household HOUSEHOLD Operating Profit (OPM) 79.9 (9.7%) Sales bn won) 99.5 (11.0%) 2009(Unit: % +9.6% Operating profit increased by 24.5% yoy, to 99.5 bn won, and operating profit margin expanded by 1.3%p, reaching 11.0%. Sales grew 9.6% yoy, reaching bn won. Full-year results for the household division in sales and operating profit represent all-time highs. Gains were due to (1) disciplined focus on premium brands resulting in improved sales mix across all categories, and (2) avoidance of excessive promotional activity and price discounting typical of competitors. Premium personal care brands continue to demonstrate high growth rates despite intense competition and a flat market overall. Eco-Beauty brand Beyond grew 38% yoy reaching 41.0 bn won in sales by strengthening its environmentally friendly value proposition, and introducing differentiated new products. Unicharm feminine care brands grew 42% across all channels reaching 61.3 bn won in sales. Body care brand Say grew 32% yoy reaching 17.0 bn won in sales. Also, fabric softener Saffron grew 23% yoy reaching 65.0 bn won in sales with strong sales contribution from recently introduced tissue-type product format. Vigorous product innovation across all categories ensured premium pricing and widened the gap with competitors, while protecting market share. Hair-care brand I Hee Care for Style was recently launched as a high-end scalp treatment system. In fabric care, patent-protected tissue type packaging for major brand Tech (detergent brand, #1 in market) and Saffron 5x Concentrated Liquid Fabric Softener (fabric softener brand, #2 in market) were launched /9

6 Cosmetics Operating Profit (OPM) 73.5 (13.8%) Sales (15.9%) % COSMETICS Operating profit increased by 34.1%, to 98.6 bn won, and operating profit margin expanded by 2.1%p, reaching 15.9%. Sales grew by 16.0%, reaching bn won. Full-year results for the cosmetics division in sales and operating profit represent all-time highs. Momentum in the cosmetics division is being sustained by line extensions with explicit functionality (e.g. anti-aging, sun protection). Such products require sophisticated technology to produce, and command premium pricing. Also, lines with a value proposition based on oriental herbal medicine continue to resonate with consumers. In the prestige segment, department store presence has expanded with 16 additional counters. Also, more counters are moving to better locations, warranted by rising sales. In the home visit channel, the network of beauty consultants has expanded to 11,285 (from 8,800 in ), reaching a wider range of consumers with more comprehensive geographic coverage. In the masstige segment, major brand Sooryehan reinforced its position as the leading oriental herbal medicine brand by expanding premium lines such as Sooryehan Soo. Beautiplex expanded to subway line #9, adding 21 locations. In discount stores, sales grew due, in large part, to better counter locations % Prestige Cosmetics Sales +22% Masstige Cosmetics Sales +12% 2009 SU:M Whoo O HUI % +22% +14% Vonin LacVert Sooryehan Isa Knox % +17% +16% +7% /

7 Beverage BEVERAGE Operating Profit (OPM) 37.8 (7.1%) Sales (9.3%) % Operating profit surged 48.5%, to 56.1 bn won, and operating profit margin expanded by 2.2%p, reaching 9.3%. Sales grew 13.0%, to bn won. Full-year results for the beverage division in sales and operating profit represent all-time highs. Sales growth was due to: (1) rising carbonated beverage sales (10.9% yoy growth) and strong performance of major noncarbonated brands including POWERade (12.9% yoy growth) and Minute Maid (14.4% yoy growth); (2) introduction of trendsetting innovative new brands such as Fanta Shaker, Glaceau Vitamin Water, and DK ; (3) share expansion in the growing coffee category with the launch of illy Coffee and new flavors for the Georgia Coffee brand; and (4) stronger offerings in the growing water category with the launch of Vio Jeju V Water and the acquisition of Diamond Pure Water. Go to market capability was enhanced by: (1) enlisting more than 300 managed wholesale partners to expand coverage in the on-premise channel, and (2) increasing the number of DDMP* outlets in which a dashboard of key point-of-sale metrics is tracked by 50% from year-end % /9 * Distribution, Display, Merchandising, Price

8 2009 Sales and Operating Profit Total company s 2009 sales increased 13% yoy, reaching bn won on the back of solid growth across all divisions. Operating profit grew 45% yoy, reaching 36.0 bn won driven by better sales mix resulting from robust growth of premium products Results 5-Year Trend 2009 Increase Sales Operating Profit Sales % Operating Profit % Recurring Profit % % % Net Profit % /9

9 2009 Sales and Operating Profit by Division Sales/Operating Profit (OPM) (Unit: bn won, %) Sales/Operating Profit (OPM) Sales/Operating Profit (OPM) HOUSEHOLD (Unit: bn won, %) COSMETICS (Unit: bn won, %) BEVERAGE 14.3 (6.8%) 21.7 (14.1%) 7.7 (5.4%) +49.3% +42.4% +23.2% 9.6 (5.3%) 15.2 (10.8%) 6.3 (4.8%) % +9.2% +9.1% /9

10 Summary Financial Statements Income Statement Balance Sheet (Unit: bn won, %) Year-end 2009 Year-end Sales ,355 1,525 COGS Gross Profit SG&A Operating Profit Non-Op. Gain/Loss Recurring Profit Income Tax Net Profit Asset 1, % 1, % Cash & Cash Equivalent 23 2% 12 1% Accounts Receivable % % Inventories % % PPE % % Investments % % Liabilities % % Accounts Payable 94 9% % Borrowings 94 9% 60 5% Corporate Bonds % % Total Shareholders' Equity % % Shareholders' Equity 89 9% 89 8% Capital Surplus 97 9% 97 9% Accumulated Other Comprehensive Income 7 1% 6 1% Retained Earnings % % Capital Adjument -71-7% -71-6% 8/9

11 2010 Business Plan In 2010, our overall strategic objectives are to: (1) develop trend-setting, innovative products to further enhance competitiveness, and (2) identify and pursue profitable growth opportunities to build scale. To accomplish these objectives, we will: (1) strengthen the brand portfolio, and (2) expand channel coverage to reach consumers anyplace and anytime. To unlock the full potential of THEFACESHOP -- achieving guidance of 10% yoy sales growth, and 15% yoy operating profit growth -- we will: (1) improve brand management and go-to-market execution, (2) expand product portfolio by leveraging already-developed formulations, and (3) add outlets to reach to more consumers guidance for household, cosmetics, and beverage combined is also sales growth of 10% yoy, and operating profit growth of at least 15% yoy. Household Cosmetics Beverage Strengthen brand portfolio by developing, and continuing to introduce: (1) premium products that are "top-ofmind" within each category, (2) differentiated products with a clear value-added benefit to consumers, (3) a robust line-up of environmentally friendly products. Specifically, we will grow specialized premium products I Hee Care for Style by Elastine and Say Miyongjongga Hyojae*. Create new niches and build on "firstmover" advantage in technology-driven categories such as stem-cell and fermentation. In the newly entered value segment, upgrade the product portfolio with differentiated functional lines. (1) Gain leadership in functional cosmetics with skin-regenerating products based on innovative stem-cell technology. (2) Further strengthen the inventive fermentation concept via the SU:M brand. (3) Grow the THEFACESHOP brand, and realize synergies with the existing business. Increase premium offerings through continuous introduction of value-added products. Further expand coverage and increase availability, especially in the onpremise channels. (1) Enhance premium image with new brands: Glaceau Vitaminwater, illy Coffee, and VioJejuV Water. (2) Increase market share in the growing categories: clear sparkling, coffee, and water. (3) Expand store coverage, and improve in-outlet execution. * Hyojae is a well-known designer of traditional Korean clothing utilizing natural fabrics and techniques. 9/9