Updated on Sept' 22, 2003

1
2002 to 2003
Updated on Sept. 22, 2003
2
Corporate Overview
Founded in 1947, LG Household Health Care(LG
HH) has been the basis of growth for LG
Chemical and LG Group. Since its demerger from LG
Chemical in 2001, LG HH has become the leading
household and health care company in Korea.
Major Products Brands
History Sales Breakdown
Cosmetics

• 1947 Established as Lucky Chemical Industrial
  Co.
• 1954 Produced Koreas first toothpaste Lucky
• 1969 IPO
• 1974 Changed corporate name to Lucky
• 1979 Established Lucky RD Center
• 1980 Established Cheongju Plant
• 1984 Launched cosmetics business
• 1995 Changed corporate name to LG Chemical
• 2001 Demerged from LG Chemical and
• established LG Household Health
  Care

• Skin Care
• Color
• Cosmetics
• Functional
• Cosmetics
• Mens Care

Household Products

• Toothpaste
• Shampoo
• Soap
• Laundry
• Detergent
• Kitchen
• Detergent
• Fabric Softener

2002 Sales KRW 1,102 bn
Household Products 66
Cosmetics 34
The sales amounts are net of sales incentive
expenses
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3
Demerger
With the demerger, management transparency and
shareholder value will continue to increase.
Structure
Positive Effects

• Concentrate on core businesses
• Enhance management transparency
• Respond quickly to customers needs

Old LG Chemical
Electronic Materials
Industrial Materials
Petrochem
Equity Investment
Household Products Cosmetics
Biotech
Rise in Corporate Shareholder value
Demerger
(As of Aug. 2003)
LGCI
LGEI
LG
? Market Capitalization ?
500

• Chemical Biz
• Investments

• Electronic Biz
• Investments

• Investments

KRW 454 bn
LG HH
250
759p
KOSPI
LG HH
LG Chem
LG Life Science
100

• Petrochem
• Industrial
• Materials, etc.

• Biotechnology

• Household
• Cosmetics

2001
2003
2002
100 Market Cap. on 25 Apr. 2001 KRW 186 bn /
KOSPI 556
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4
Corporate Structure
Utilizing EVA TSR as management standards,
2,900 employees are working together to
enhance corporate value. In addition, advanced
RD, production, logistics sales network are
contributing to our competitiveness.
Organization
Management/Shareholders
BOD - 8 directors including 4 outside directors
R D
Product/Design/Packaging Research CTRs

• Management Standard
• - EVA ROIC - WACC (2002 11)
• TSR Weighted Average Share Price
  Increase
• (2002 25)

Production
4 plants 4 overseas J/Vs
Employees - 2,900 People
Logistics
10 logistics centers
(End of June 2003)
Agents
Direct Sales Door to Door Sales
Discount Stores Department Stores Convenient
Stores
Shareholder Structure - LG, the holding company,
is a major shareholder
Supermarkets Specialty Shops
(End of Aug. 2003)
Consumers
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5
Corporate Strategy, Business Results Targets
As a leading home care and personal care company,
LG HH will enhance market leadership by
restructuring, strengthening brand
competitiveness and improving organizational
competency.
1)
Corporate Strategy
Business Results Targets
(KRW bn)
108 (10.4)
99 (8.9)
80 (7.3)
Leading Home Care and Personal Care
Company Devoted to the pursuit of beauty, dreams
and the betterment of life
Operating Income (Margin)
1,100
1,102
?0.2
1,032
7
Enhance Market Leadership by
(32)
(34)
(35)
Cosmetics

• Restructuring
• Strengthening brand competitiveness
• Improving organizational competency

(68)
(66)
Household Products
(65)
2001
2002
2003(e)
Note1) Sales amounts are net of sales incentive
expenses(01 KRW 79bn, 02 KRW 86bn).
The 2002 financial report includes 2001
2002 special bonuses( KRW 8bn 9bn respectively).
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6
Household Products
Business Strategy
Changes in consumer preferences, more intense
competition and channel reshuffling are expected.
However, LG HH will enhance market leadership in
major product categories and develop new growth
engines for the future.
Business Environment
Strategy
Customer

• Strengthening market leadership

• Focus on brand, image and perceived quality
• Greater consumer needs for high-functional
  products
• Promotion becoming more important

• Enhancing competitiveness in growing channels

• Developing sustainable growth engines

Competitor

• Foreign Expansion of M/S and product categories
• Local Focus on certain categories and
• penetration into niche markets

Category
Sales Breakdown
24
27
?19 Categories?
Discount Stores
39
36
?6 Major Categories? 59 of Sales
Agents
Channel
37
37

• Continuous growth of discount stores
• Expansion and diversification of online sales

Direct Sales
2001
2002
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7
Sales M/S
Sales of KRW 735bn and operating profit of KRW
72bn was reached in 2002, an increase of 7 and
5 year-on-year respectively. Despite intense
competition, LG HH has maintained market
leadership.
Sales
Note1)
Market Share
()
(KRW bn)
49
20
17
Others
72 (9.7)
(2001)
L G 47
66 (8.8)
Aekyung 19
Toothpaste
Pacific 19
68 (10.0)
(2002)
Others
Operating Income (Margin)
27
18
20
Others
Aekyung 12
L G 28
PG 19
Pacific 18
Unilever 15
Shampoo
753
Others
735
3
686
40
15
12
Others
11
7
L G 37
Pacific 16
Aekyung 10
Soap
Unilever 14
Sales
Others
36
27
Others
21
L G 36
L G 37
Laundry Detergent
Aekyung 27
CJ 22
Others
43
34
Others
15
L G 44
Kitchen Detergent
CJ 15
Aekyung 33
Others
31
47
16
Others
L G 31
Fabric Softener
Oxy 15
Pigeon 49
Others
2001
2002
2003(e)
Including inter-company transaction
Note1) The sales amounts are net of sales
incentive expenses(01 KRW 28bn, 02 KRW 34bn).
2002 financial report includes
2001 2002 special bonuses( KRW 4bn 5bn
respectively).
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8
Cosmetics
Business Strategy
Changes in distribution channels and aggressive
marketing from foreign and local competitors are
expected. LG HH will secure growth momentum by
building Power Brands and establishing a
different strategy for each distribution channel.
Business Environment
Strategy
Customer

• Building Power Brands

• Greater consumer preference for premium
  foreign brands
• Diversification of products and brands according
  to
• consumer needs

• Different Strategy for Each Channel

• RD and Design Capability Enhancement

Competitor

• Foreign New entry and penetration into diverse
  channels
• Local Major players are positioned in multiple
  channels
• Minor players are mainly niche
  players

• Specialty Shops Discount Stores
• - Volume and profit driver
• - Aggressive marketing and channel development

• Department Stores
• - Strategic development as a premium channel

Channel

• New door-to-door channel
• - Change of business model and restructuring

• Larger and more modernized specialty shops
• Growth of discount stores and department stores
• More intense competition in door-to-door sales

• Old door-to-door channel
• - Business model improvements and gradual
  expansion

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9
Sales
Sales of KRW 383bn and operating profit of KRW
27bn was reached in 2002, a growth of 5 and ?32
year-on-year respectively. Market share declined
slightly.
Sales by Channel
Sales
Note1)
()
(KRW bn)
?LG HH M/S ?
? 15 ?
? 16 ?
? 15 ?
40 (10.9)
27 (7.1)
Export Home shopping E-channel, etc.
Operating Income (Margin)
Others
14
13
13
14 (3.9)
Old type
20
21
24
Premium Market
New type
383
366
Department stores
358
5
? 6
Sales
67
66
Discount stores
62
Mass Market
Specialty shops
2001
2002
2003(e)
2001
2002
2000
Including inter-company transactions
Note1) The sales amounts are net of sales
incentive expenses(01 KRW 51bn, 02 KRW 52bn).
2002 financial report includes 2001
2002 special bonuses( KRW 3bn 3bn
respectively).
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Overseas Business
Based on localization strategy, LG HH actively
pursues overseas business with particular
emphasis on JVs in China and Southeast Asia.
Beijing LG Household Chemical
LG HH International Trading

• Country/Est. China / 1996
• Business Toothpaste Production
• 03 Sales Target U 12 mn

• Country/Est. China / 2000
• Business Shampoo/Soap/
• Cosmetics etc.

LG HH RD Shanghai

• Country/Est. China / 1998
• Business Natural Materials RD

Production JV (4)


LG HAI
Sales Subsidiary (2)

• Country/Est. U.S.A. / 1990
• Business Toothpaste/Detergent/
• Cosmetics Sales

RD Subsidiary (1)
Hangzhou LG Cosmetics

• Country/Est. China / 1994
• Business Cosmetics Production
• 03 Sales Target U 20 mn

LG Vina Cosmetics
Cognis Rika

• Country/Est. Vietnam / 1997
• Business Cosmetics Production
• 03 Sales Target U 19 mn

• Country/Est. Malaysia / 1989
• Business Fatty Alcohol Production

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11
Key Financials
At the end of 2002, debt-to-equity ratio declined
to 150, a 28p decrease from 2001. LG HH plans
to reduce the ratio to the 130 range by 2003.
Borrowings Interest
Key Financials
(KRW bn)
(KRW bn)
2001
2002
2003(e)
2001
2002
2003(e)
678 435 407 173 271 89 150 64
703 428 404 164 300 89 135 55
E B I T D A Interest Expenses EBITDA/Interest
Expenses
127 12 10.7
135 21 6.4
112 9 12.3
Assets (Fixed Assets) Liabilities (Borrowings)
Shareholders Equity (Capital Stocks) Debt/Equity
Borrowings/Equity
647 414 414 205 233 89 178 88
178
Debt/Equity ()
150
135
2002
2003
2001
Borrowings
205
Sales Gross Profit Operating Income Recurring
Profit Net Profit E P S (KRW) R O A R
O E
1,102 563 99 96 44 2,489 6.5 16.3
1,032 528 108 107 75 4,205 11.5 32.0
1,100 550 80 80 56 3,172 8.0 18.8
173
164
2001 2002 2003
(e)
Including pre-demerger 1Q results
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12
Cash Flow
Net Cash from business operating activities is
expected to be KRW 12bn in 2003. It will
primarily be allocated to maintaining a stable
dividend pay-out ratio, enhancing
market leadership and improving financial
conditions.
Cash Flow
(KRW bn)

2001
2002
2003(e)
(Dividend)
Cash Flow from Operations
Net Income Depreciation
Working Capital
Dividend Others Capital Expenditure
87 56 21 10 - 25 28
37 44 29 -18 -18 21 38
52 56 31 -8 -27 4 45
()
40 30 20 10
Pay-out ratio
1,500
Dividend Per Share (KRW)

1,000
750
Dividend Yield
2000 2001 2002



Net Cash Flow
84
20
12
Excluding 1Q 2001 results Including
disposal of assets (01 KRW 13 bn, 03 KRW 16
bn)
Pre demerger dividend of LG Chem Pay-out
ratio excludes extraordinary loss
Sustain Stable Dividend Pay-out Ratio Enhance
Market Leadership Improve Financial Conditions
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13
Thank you!
This presentation contains forward
looking statements which are based on
managements 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