LG Household & Health Care Results for 1Q 2010 LG HOUSEHOLD & HEALTH CARE HEALTHY BEAUTIFUL REFRESHING April 27, 2010
CONTENTS Total Company (K-IFRS) Operating Profit and Operating Profit Margin Trend Results by Business Healthy Beautiful Refreshing Summary Financial Statements (K-IFRS) Starting from 1Q 2010, LG H&H earnings releases will be under K-IFRS. Audit of these results is still in progress. Figures in this disclosure are subject to change during the auditing process.
Results Total Company (K-IFRS) Total company in 1Q 2010 delivered 671.0 bn won in sales (23.8% growth yoy), and 93.0 bn won in operating profit (39.6% growth yoy), showing solid growth across all businesses. 1Q 2010 Results (K-IFRS) 1Q 2009 1Q 2010 Increase 5-Year Trend 1Q Sales 1Q Operating Profit Sales 542.2 671.0 23.8% Operating Pro 66.6 93.0 39.6% 269.9 671.0 542.2 482.3 23.8% 320.9 31.1 40.5 57.3 66.6 93.0 39.6% Recurring Pro 61.9 86.4 39.5% Net Profit 44.1 64.0 45.1% 06 07 08 09 10 06 07 08 09 10 * 2006-2007: K-GAAP Non-Consolidated, 2008: K-GAAP Consolidated, 2009~2010: K-IFRS 1/6
Operating Profit and Operating Profit Margin Trend In each business, 1Q 2010 operating profit, as well as operating profit margin, reached all-time highs. On a yoy basis, divisional operating profit increased 18.9% in healthy, 70.2% in beautiful, and 14.1% in refreshing, reaching operating profit margins of 12.7% in healthy, 18.4% in beautiful, and 7.9% in refreshing. Operating profit growth in beautiful has accelerated due to the acquisition of THEFACESHOP. Operating Profit/OPM Operating Profit/OPM Operating Profit/OPM (Unit: bn won, %) HEALTHY (Unit: bn won, %) BEAUTIFUL (Unit: bn won, %) REFRESHING 18.4 7.9 11.8 12.2 12.3 12.2 12.7 10.8 15.1 17.3 15.6 7.2 7.8 21.6 24.1 26.8 29.2 34.7 23.6 27.7 47.2-19.6-11.6 9.5 16.4 8.1 9.8 11.1-23.4-11.3 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10 * 2006~2008: K-GAAP Non-Consolidated, 2009~2010: K-IFRS 2/6
Results - Healthy HEALTHY Operating Profit (OPM) 2009 29.2 (12.2%) Sales 238.4 2010 34.7 (12.7%) 272.3 +18.9% +14.2% Operating profit increased 18.9% yoy to 34.7 bn won, and operating profit margin expanded 0.5%p, reaching 12.7%. Sales grew 14.2% yoy, reaching 272.3 bn won due to ongoing improvement in sales mix driven by successful premium line extensions and expanding scale in premium brands. Premium personal care brands continue to demonstrate high growth rates. Unicharm feminine care brands grew 40% across all channels reaching 24.6 bn won in sales, and continued to improve profitability. Market share expanded to 16.6% (+2.7%p yoy), enabled by growing brand awareness and superior product functionality. Eco-beauty brand Beyond grew 43% yoy reaching 13.0 bn won in sales, driven by differentiated new products including a kids line, and a fermentation-based line targeting figure-conscious women. The yogurt business through an alliance with Danone reached 3.5 bn won in sales and is growing steadily. Vigorous product innovation with differentiated story-telling selling point across all categories widened the gap with competitors. Examples of such products are: (1) hair-care brand I Hee Care for Style, which was co-developed with a hair stylist, (2) Double Rich Simple Hair dye, which was launched as an innovative easy-to-use product, and (3) Perioe Poop Toothpaste, which stimulates kids curiosity. 2009 2010 3/6
Results - Beautiful BEAUTIFUL Operating Profit (OPM) 2009 27.7 (15.6%) Sales 178.2 2010 47.2 (18.4%) 256.9 2009 2010 +70.2% +44.2% Operating profit reflecting the recent acquisition of THEFACESHOP, surged 70.2% yoy to 47.2 bn won, and operating profit margin expanded by 2.8%p, reaching 18.4%. Sales grew 44.2% yoy, to 256.9 bn won. In the prestige and masstige segments, new cosmetics lines OHUI The First and Isa Knox Te rvina were launched through a strategic alliance with Cha Bio & Diotech (Cha Hospital Group), and are establishing a leadership position in the biotech cosmetics category. Active ingredients in these products replicate the regenerative properties of human stem cells and human placenta cells. For prestige cosmetics, department store channel expanded with 7 additional counters for the rapidly growing SU:M brand. In the home visit channel, sales grew 27% yoy, and 720 beauty consultants were added. In the mass segment, acquisition of THEFACESHOP was completed in January 2010. Despite undergoing significant changes during 1Q as the business was integrated, sales reached 64.2 bn won (+3.9% yoy), and operating profit surged to 11.5 bn won (+19.5% yoy). Already, synergies with the existing cosmetics business are being realized. New products leveraging previously developed innovative technology were launched in the sun protection skin care segment. Also, 16 additional outlets were opened. Prestige Sales Masstige Sales Mass Sales OHUI, Whoo, SU:M, Chungyunjin Isa Knox, LacVert, Sooryehan, Vonin THEFACESHOP 69.3 83.7 +21% 83.7 90.1 +8% 61.8 64.2 + New 4/6 1Q 09 1Q 10 1Q 09 1Q 10 1Q 09 1Q 10
Results - Refreshing REFRESHING Operating Profit (OPM) 2009 9.8 (7.8%) Sales 125.5 2010 11.1 (7.9%) 141.7 +14.1% Operating profit increased 14.1% yoy to 11.1 bn won, and operating profit margin reached 7.9%. Sales grew 12.9% yoy to 141.7 bn won due to (1) improvements in execution, primarily in profitable on-premise (traditional) channels, and (2) new product activities packaging and flavor extensions. Carbonated beverage sales grew 5.9% yoy with introduction of mini-size PET bottles for Coca-Cola, DK, and Fanta. Non-carbonated beverage sales grew 34.9% yoy with new product activity in strategic categories such as water and coffee. New water brand Vio Diamond Water, new packages for lifestyle beverage Glaceau Vitamin Water, and new flavors and packages under Georgia Coffee brand were launched. Integration of Hankook Beverage has: (1) further improved utilization in distribution and manufacturing facilities, and (2) provided a platform to enter new non-carbonated categories. Go to market capability was enhanced by: (1) enlisting more than 590 managed wholesale partners to expand coverage in the on-premise channel, (2) developing products specific to the onpremise channel, and (3) establishing partnerships for further expansion. +12.9% 2009 2010 5/6
Summary Financial Statements (K-IFRS) Income Statement 1Q 2009 1Q 2010 Sales 542 671 COGS 261 308 Gross Profit 281 363 SG&A 212 272 Other Operating Gain/Loss -2 3 Operating Profit 67 93 Non-Op. Gain/Loss -5-7 Recurring Profit 62 86 Income Tax 18 22 Net Profit 44 64 Balance Sheet 2009 Year-end 1Q 2010 Asset 1,313 1,836 Cash & Cash Equivalent 34 38 Accounts Receivable 226 293 Inventories 161 181 PPE 872 1,312 Intangible Asset 226 662 Liabilities 659 1,160 Accounts Payable 134 193 Borrowings 73 50 Corporate Bonds 170 469 Total Shareholders' Equity 654 676 Shareholders' Equity 89 89 Capital Surplus 97 97 Accumulated Other Comprehensive Income -2-2 Retained Earnings 491 513 Capital Adjument -72-72 6/6