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Press Release


LG Electronics Second Quarter Sales at KRW 5,615 Billion

- 2Q sales total KRW 5,615 billion, operating profit KRW 144 billion, Net profit KRW 151 billion

- 2Q sales total KRW 5,615 billion, operating profit KRW 144 billion, Net profit KRW 151 billion
- Overall sales decreased due to Won's appreciation and slowdown in export.
- Digital Appliances Company's domestic sales increased as seasonal product sales soured
- To focus on accelerated cost innovation and profitability oriented management

Seoul, July 18, 2005 --- On July 18, 2005, Mr. Young Soo Kwon, Chief Financial Officer of LG Electronics, announced the second quarter performance at the Korea Stock Exchange. Sales reached KRW 5,615 billion (export: KRW 4,150 billion, domestic sales KRW 1,466 billion), down by 6.9% year-on-year and 5.8% quarter on quarter. LG Electronics generated KRW 144 billion in operating profit (2.6% margin) and KRW 151 billion in net profit (2.7% margin). Recurring profit reached KRW 216 billion (3.8% margin).

While domestic sales increased as seasonal products sales grew, the overall sales fell 7% due to the continuing Won appreciation and slowdown in exports. Second quarter profit was down year-on-year due to the decrease in profitability of handsets and Display products.

Sales from Digital Appliances Company declined 6% year-on-year to KRW 1,621 billion (domestic KRW 765 billion, export KRW 856 billion). Domestic sales were up by 32% year-on-year due to strong sales of air conditioners. Exports decreased by 25% year-on-year due to the Won appreciation. Operating profit reached KRW 162 billion with a 10% margin.

Sales from Digital Display Company fell by 2% year-on-year to KRW 1,155 billion (domestic KRW 254 billion, export KRW 901 billion). Sales of DTV were up by 42% year-on-year, with plasma TVs increasing by 80% and LCD TVs by 192% year-on-year. Total amount of PDP module units grew 113%. Due to falling prices this division recorded operating loss of KRW 22 billion. However, Plasma TV profitability improved.
Sales from Digital Media Company dropped by 18% year-on-year to reach KRW 732 billion. (domestic KRW 157 billion, export KRW 575 billion). Domestic sales rose as PC brand sales increased. However, exports decreased year-on-year due to the won appreciation and price decline. Operating profit reached KRW 27 billion with a 3.7% margin.

Sales from Mobile Communications Company declined 5% year-on-year to KRW 2,081 billion (domestic KRW 265 billion, export KRW 1,816 billion). Operating profit reached KRW 8 billion. Handsets unit sales rose 22% year-on-year to 12.1 million sets. However, fierce competitions in major markets led to a decline in the growth rate. CDMA unit sales maintained a leading position in major markets and WCDMA sales increased as the European 3G service expanded. GSM growth rate slowed down due to competition in major markets.

Due to intensifying competition in the handset market and price decline of display products, the difficult business environment is likely to persist. LG Electronics will focus on accelerating cost innovation and profitability oriented management.