Press Release

01/24/2006

LG Electronics Fourth Quarter Earnings: Sales at 6,182 billion KRW, Operating Profit at 211 billion KRW

Mr. Young Soo Kwon, President and Chief Financial Officer of LG Electronics, today announced the annual and fourth quarter earnings at the LG Twin Tower.

Total sales for 4Q 2005 reached 6,182 billion KRW, down 5.2% year-on-year due to Korean won appreciation and expansion of overseas production, but still up 2.7% quarter-on-quarter geared by growth in handset and display products. Operating profit reached to 211 billion KRW, up 122.4% year-on-year but down 24.6% quarter-on-quarter. Except for digital display, profitability in all divisions increased year-on-year, but due to seasonality and profit deterioration at digital display quarter-on-quarter earnings declined. Profits deteriorated quarter-on-quarter in display products - TV, Monitor - due to sharp price decline, while handset profits increased with the help of new product launch and strong sales of WCDMA.

Sales from Digital Appliance Company declined 6.4% quarter-on-quarter to 1,239 billion KRW due to seasonality, but strong sales of premium products such as TROMM washing machines, commercial air conditioners and DIOS 3-door refrigerators grew in North America and developed market led 60.9 billion KRW improve and 4.9% Prise in operating profit year-on-year.

Sales from Digital Display Company increased 5.6% quarter-on-quarter and 2.8% year-on-year to 1,393 billion KRW for the strong demand in PDP/LCD panel Digital TVs and PDP module from A3 line. Sales of digital TVs increased quarter-on-quarter 11%, with PDP TVs and LCD TVs by 10% and 14% respectively. PDP module shipment jumped 38% quarter-on-quarter to meet demands by ramping Line and improving yield. Operating profit deteriorated due to the sharp decrease in sales price of LCD TV and increase in marketing expenditure.

Sales from Digital Media Company grew by 5.1% quarter-on-quarter but drop by 10.2% year-on-year to 820 billion KRW with 4.4% operating profit. Stable profit structure stems from strong sales from AV products such as HD type STB and premium home theatre to Korean market increased. Sales from IT products including PCs decreased due to decline of export ASP.

Sales from Mobile Communication Company increased 5.3% quarter-on-quarter to 2,679 billion KRW with 8.1% operating margin to 217 billion, which is 70.2% jump from the previous quarter. Handsets sales was up 6.9% to 2,452 billon KRW with also 8.1% operating margin to 198 billion KRW, 60.7% rise from the previous quarter. CDMA shipments were up 5% in Korea, down 6% in overseas and improved ASP geared sales in GSM to North American operators, Europe and CIS markets. WCDMA shipments also increased a strong 86% quarter-on-quarter. Success of -black-label- CDMA phone and new slim 3G led the overall improvement in profitability.

Total shipments increased by 24% year-on-year, which is 54.9 million units from 44.4 million units, and 5% quarter-on-quarter to 16.2 million units from 15.5 million units.

Total 2005 Sales reached 23.77 trillion KRW, fell 3.6% year-on-year, and net profit of 703 billion KRW. Also global sales including overseas subsidiaries in 2005 was 35.55 trillion KRW, up from 35.29 trillion KRW and consolidated sales has risen to 44.49 trillion KRW from 43.25 trillion KRW year-on-year.

LG's 2006 sales goal is 24.0 to 24.5 trillion KRW on non-consolidated basis - globally 38.5 to 39.0 trillion KRW, which is 8 to 10% increase from the performance of the year 2005. The company also plans to invest 2.5 trillion KRW in total - 1.1 trillion KRW in facilities and 1.4 trillion KRW in R&D, globally 3.1 trillion KRW in total - 1.7 trillion KRW in facilities and 1.4 trillion KRW in R&D. Investment in facilities includes plasma production lines and R&D institutes. Prospects for the new year are to attain profitable growth via mega-hit handset and improve profitability on display products.

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