Press Release

07/19/2006

LG ELECTRONICS REPORTS SECOND QUARTER 2006 EARNINGS RESULTS

LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited earnings results of the three month period ended June 30, 2006. Amount in Korean Won (KRW) are translated into US dollars (USD) at the average rate of three month period in each quarter, which was KRW 950 per US dollar (2006 2Q), KRW 977 per US dollar (2006. 1Q, QoQ), KRW 1,008 per US dollar (2005. 2Q, YoY).

LG Electronics (LG), a leader in consumer electronics and mobile communications, announced unaudited earnings results of the three month period ended June 30, 2006. Amount in Korean Won (KRW) are translated into US dollars (USD) at the average rate of three month period in each quarter, which was KRW 950 per US dollar (2006 2Q), KRW 977 per US dollar (2006. 1Q, QoQ), KRW 1,008 per US dollar (2005. 2Q, YoY).



Sales and Profit

Sales recorded KRW 5.796 trillion (USD 6.10 billion) in the second quarter of 2006, rose 3.2 % from KRW 5.615 trillion (USD 5.75 billion) a year earlier but fell 0.1% from KRW 5.800 trillion (USD 5.75 billion) from the previous quarter. Operating profit rose 32.4% year on year thanks to Digital Display and Mobile Communications business, but recurring and net profit decreased to losses at KRW 10 billion (USD 10.5 million) due to equity method losses. Strong sales of plasma panels and plasma and LCD digital TV business lead 23.7% jump in sales and turnaround in profitability, and Digital Appliance business profitability sustained due to strong sales of ref. and air conditioners. Sales in Mobile Communications showed progress both on a QoQ and YoY basis, with profitability improving as well. Exports recorded KRW 4.212 trillion (USD 4.43 billion), 72.7% of total sales.

Digital Appliance Company sales declined 3.7% YoY to KRW 1.562 trillion (USD 1.64 billion). Sales from premium products such as side-by-side ref. and drum-type washing machines increased in Korea. 27% growth in North American market was particularly noticeable thanks to channel expansion and rise in commercial air conditioners. Slow domestic air conditioners sales due to mild weather and increase in raw material cost caused a decline in the scale of profit YoY, but sustained operating profit margin by strengthening business structure and cost cutting measures.

Digital Display Company sales increased 23.7% YoY and 0.4% YoY to KRW 1.429 trillion (USD 1.50 billion). Despite the seasonal weakness, sales at plasma and LCD digital TV business rose 16% in Korea and 5% overseas as demand for large-screen TVs increased ahead of the World-cup soccer games. Sales of plasma panels held up with the portion of high definition rising to 68% exceeded industry average of 66%. The Company's operating profit especially in plasma panels expanded to KRW 21 billion (USD 22 million) primarily due to improvement in product mix to large size digital TVs and cost reduction efforts. The Company shipped a total of 716 thousand units plasma panels, 14 thousand units fewer than the previous quarter at 730 thousand units.

Sales from Digital Media Company decreased 16% QoQ to KRW 642 billion (USD 676 million). New notebook PCs in Korean market gained market share, but revenue declined due to competition from low-end PCs. Decline in average selling price of IT products and storages such as DVD-W in overseas market including Russia was the main reason for the downward movement.

Mobile Communication Company recorded sales of KRW 2.193 trillion (USD 2.31 billion), 5.4% YoY and 7.9% QoQ higher and operating profit of KRW 21 billion (USD 22 million), a rise from KRW 8 billion (USD 7.9 million) YoY and loss of KRW 9 billion (USD 9.2 million) QoQ.

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