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Press Release

04/19/2005

LG Electronics First Quarter Sales at KRW 5,959 Billion

- 1Q sales totals KRW 5,959 billion, operating profit KRW 280 billion,

- 1Q sales totals KRW 5,959 billion, operating profit KRW 280 billion,
recurring profit KRW 77 billion, net profit KRW 83 billion
- Digital Appliances Company profitability remained high despite the Won's
appreciation and higher raw materials costs
- To focus on premium brand products and cost innovation to counter potential
further raw material cost hike, ASP decline and Won appreciation


Seoul, Korea --- April 19, 2005 --- On April 19, 2005, Mr. Young Soo Kwon, Chief Financial Officer of LG Electronics, announced the first quarter performance at the Korea Stock Exchange. Sales reached KRW 5,959 billion (export: KRW 4,657 billion, domestic sales KRW 1,302 billion), down by 0.6% year-on-year and 8.6% quarter on quarter. LG Electronics generated KRW 280 billion in operating profit (4.7% margin) and KRW 83 billion in net profit (1.4% margin). Recurring profit reached KRW 77 billion (1.3% margin) due to equity method loss of KRW 159 billion, attributable to weak performance of LG.Philips LCD, LG.Philips Displays and other affiliates.

While sales in Korean Won terms decreased slightly due to the Won's appreciation, USD denominated export growth of LG branded products remained strong, growing 13.2% year-on-year. Domestic sales grew on the back of strong sales of consumer electronics products. First quarter profit was down year-on-year due to the increase in R&D investment, the Won appreciation and raw material cost hike, amid the weak business environment.

Sales from Digital Appliances Company declined 5.5% year-on-year to KRW 1,669 billion (domestic KRW 494 billion, export KRW 1,175 billion). Domestic sales were up by 27% year-on-year due to a surge in air-conditioner sales and other premium products. Exports decreased by 15% year-on-year due to the won appreciation and relocation of production base. Operating profit reached KRW 170 billion with a 10.2% margin.

Sales from Mobile Communications Company grew 15.6% year-on-year to KRW 2,155 billion (domestic KRW 333 billion, export KRW 1,822 billion). Operating profit reached KRW 102 billion with a margin of 4.7%. Sales of handsets alone grew 18.8% year-on-year to KRW 1,873 billion, with unit growth rising 27% year-on-year to 11.1 million sets. In Korea, CDMA unit sales declined 39% year-on-year due to the demand slowdown, while quarter-on-quarter unit sales increased, mainly driven by MNP. In overseas markets, CDMA unit sales increased 22% year-on-year. Sequential sales
declined 14% due to excess inventory in major markets. GSM and WCDMA unit sales jumped 70% year-on-year, versus 32% qoq decline. Overall, unit shipment was down sequentially due to seasonality, while cost increased due to a rise in R&D investment and added costs from production line consolidation.

Sales from Digital Display Company fell by 1.9% year-on-year to KRW 1,253 billion (domestic KRW 263 billion, export KRW 990 billion). Sales of DTV were up by 25% year-on-year, with plasma TVs increasing by 82% and LCD TVs by 70% year-on-year. Sales of PDP module grew 70% while sales of display components grew 26% year-on-year. In total, exports decreased by 6% year-on-year due to the Won appreciation, but increased by 8% year-on-year in US dollar value. Operating profit reached KRW 17 billion with a 1.4% margin.

Sales from Digital Media Company dropped by 18.8% year-on-year to reach KRW 846 billion. Domestic sales rose dramatically, driven by the successful launch of PC notebooks. However, exports decreased year-on-year due to the won appreciation and price erosion. In particular, sales of optical storage devices declined year-on-year due to the overall price decline, while the portion of DVD-W sales increased. On the other hand, domestic PC sales increased on the back of robust sales of branded laptop PCs, while the portion of OEM business decreased. Operating profit reached KRW 23 billion with a 2.7% margin.

LG Electronics will focus on premium brand products and cost innovation to counter concerns over external factors, such as raw material cost hike, display price decline, and exchange rate.

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