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Press Release

01/25/2005

LG Electronics Posts Record Annual Sales and Operating Profit for 2004

LG Electronics Posts Record Annual Sales and Operating Profit for 2004

LG Electronics Posts Record Annual Sales and Operating Profit for 2004
- Annual sales amount to 24.7 trillion won, up 22.2% YoY
- Net profit increases 130.3% YoY to 1,526 billion won
- Mobile handset sales increases 61.6% YoY to 8,351 billion won
- 2005 Sales Target 28~30 trillion won (up 13~21% YoY), with plans to spend
3.5 trillion won in facility and R&D investment


January 25, 2005, Seoul, Korea -On January 25, 2005, Mr. Young Soo Kwon, Chief Financial Officer of LG Electronics, announced the fourth quarter and 2004 annual performance at the Korea Stock Exchange.

LG Electronics, (CEO: S.S.Kim/06657.KS), despite last year's sluggish domestic economy, posted record annual sales of 24.659 trillion won, up 22.2% YoY, and operating profit of 1,250 billion won (5.1% margin), the largest ever. Recurring profit recorded 1,855 billion won with a margin of 7.5% and net profit recorded 1,526 billion won with a margin of 6.2%.

Annual operating profit rose 17.7% YoY, thanks to the improvement in mobile handset profitability. Recurring profit and net profit grew 121.6%, 130.3% YoY, respectively, on the back of equity method gains.

(2004 Performance Overview)

LG Electronics recorded its largest annual sales in 2004, up 22.2% YoY to 24.7 trillion won. Domestic sales generated 5,086 billion won (6.1% increase) and exports generated',573 billion won (27.2% increase).

Amidst the sluggish domestic economy and the delayed recovery of the global IT industry, LG Electronics maintained its growth in mobile handsets, PDP and digital TV due to increased effort toward marketing and R&D.

Sales from Mobile Communications Company were up by 56.6% YoY, recording 9,233 billion won. Strong handset sales in 3G markets, centering on Europe and North America, led to 8,351 billion won in total sales, up 61.1% from last year. Total sales amount have increased more than 45% for the last five years.

Sales from the Digital Display & Media Company grew 6.9% on year to record 9,037 billion won. Increased sales can be attributable to strong sales of digital TV, PDP and optical storage.

Sales from the Appliance Company increased 10.0% YoY to 6,216 billion won. A surge in premium products, including WHISEN air-conditioners and TROMM washing machines as well as other premium appliance sales, led the overall growth.

(Fourth Quarter Performance)

Despite the loss from the appreciation of the Korean Won, 4Q sales increased 6.7% QoQ and 20.4% YoY due to strong exports of handsets and sales increase of PDP and digital TVs. Operating profit decreased on quarter due to appreciation of the Korean Won, slowed domestic economy, and raw material price increase.

(4Q and 2004 Annual Sales by Company)

Mobile Communications Company
Domestic sales increased 13.4% to 1,579 billion won and overseas sales increased 70% to 7,654 billion won.

Total handset sales were up 61.1% YoY, recording 8,351 billion won. Unit sales increased 61.8% YoY with total annual sales of 44 million units.

4Q domestic sales of mobile handsets fell 13.4% QoQ and 13.2% YoY to 223 billion won due to slow economy and decreased demand. However, mobile handset exports posted record quarterly sales of 2,344 billion won, up 15.7% QoQ versus 67.2% YoY, due to steady sales of CDMA and WCDMA handsets in North America and Europe.

LG Electronics is expected to maintain its No. 1 CDMA ranking in the North American region by establishing additional businesses with operators. In 2005, overall handset sales are expected to grow 40% YoY to 62 million units, versus last year's 44 million units, by fortifying market leadership in the GSM and WCDMA market.

Display & Media Company

In 2004, sales from Digital Display & Media Company grew 6.9% YoY, reaching 9,037 billion won, attributable to increased sales of display products, such as DTV and PDP. Operating profit reached 289 billion won with a margin of 3.2%.

Although 4Q sales decreased slightly by 1% YoY to 2,323 billion won due to reduction in PC OEM business, DTV sales, mostly PDP/LCD TVs, increased 55% YoY and PDP module sales surged 68%.

Digital Appliance Company

While domestic sales of appliance products increased 1.8% to 1,982 billion won, exports jumped 14.4% to 4, 234 billion won as sales of LG-branded premium products led the growth in overseas markets.

Therefore, annual sales increased 10.0% YoY to 6,216 billion won with operating profit of 448 billion won (7.2% margin).

Compared with the same period in 2003, 4Q sales of TROMM washing machines increased 42% in CIS and North America markets and DIOS refrigerators increased 32% on strong sales in Europe and North America, helping to raise overall sales growth.

LG Electronics will continue to expand its line of high value-added products and maintain steady growth of premium products in Europe and North America.

<2005 Forecast>

LG Electronics has set out its 2005 sales target between 28~30 trillion won, up about 20% from last year. LG Electronics plans to invest 3.5 trillion won (facility investment: 1.7 trillion won; R&D 1.8 trillion won), up 40% from 2004, to strengthen its technology and R&D capacity.

The company will concentrate more than 50% of its total investment on DTV, PDP and mobile handset. Furthermore, it will stimulate investment in new businesses such as home networks, telematics, Post PC, OLED, and DMB - adopting them as future growth engines.

Of the total investment, LG Electronics will spend 1.7 trillion won, up about 31% from last year, focusing on newly-establishing/expanding PDP and handset production lines. OLED, the next-generation display, will also be included in the investment.

For research and development, the company will invest 1.8 trillion won, up 40% from 2004, to solidify its product leadership in high-end mobile handset business, including digital multimedia broadcast (DMB) phones, 3G phones and high-definition camera phones while also stepping up its capacity to strengthen software (digital TV chip-set) and PDP/LCD TV production.

To strengthen the fast-growing hi-tech businesses, LG Electronics will recruit about 3,000 people, up 15% from last year. 90% of newly-recruited manpower will be committed into R&D for the display and mobile handset sectors, therefore fortifying the high value-added and core technology fields. About LG Electronics, Inc. LG Electronics, Inc. (Korea Stock Exchange: 06657.KS), headquartered in Seoul, South Korea, was established in'58 and has grown into a global force in electronics, information and communications products with annual total revenues of US $29.9 billion (consolidated). With more than 64,000 employees working in 73 overseas subsidiaries and marketing units around the world, LG Electronics is comprised of four main business companies including Digital Display, Digital Media, Digital Appliance, and Mobile Communications.

LG Electronics' goal worldwide is to create and enable the intelligent networking of digital products that will make consumers' lives better than ever. For more information please visit www.lg.com

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