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LG Electronics
November 2002
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As a note, this presentation was released as the dates shown and reflected management views as of these dates.
While reviewing this information, the data and information contain certain forward-looking statements that are
subject to known and unknown risks and uncertainties that may cause actual results to differ from those stated
or implied by such statements. These risks and uncertainties include, but are not limited to the risk factors noted
in the Companys Earnings Releases and the Companys filings with the Financial Supervisory Commission of
Korea. The Company assumes no obligation or responsibility to update the information provided in the
presentations in correspondence to their respective dates.
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Accomplishments to DateAccomplishments to Date
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Business StructureBusiness Structure
LG Micron
LG Innotek
LG. Philips LCD
LG. Philips Displays
LGIBM PC
Overseas Subsidiaries
Air-Conditioner
Refrigerator
Washing Machine
Vacuum Cleaner
Cooking ApplianceOthers
LGE is in four
different
business lines
with two JVs
with Philips
Digital Display& Media& Media
Optical Storage
PC
Monitor
TV
Audio/Visual
Recording Media
PDP
Digital Display HomeAppliance
HomeAppliance
MobileHandset
MobileHandset
LG ElectronicsLG Electronics
LG Electronics Investment
(LGEI)
TelecomSystem
Wireless System
Switching
& Transmission
Data Network
TelecomSystem
CDMA handset
GSM handset
WLL handset
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AccomplishmentsAccomplishments
Now LGE is
reshaped and
more focused
and most of all,
has much
clearer direction
Demerger to focus on main business
Strong growth, high margin Home Appliance division
- CAGR from 1999 to 2002 : LGE 22% vs. Industry 4%
High growth in Handset division with growing market share
- CAGR from 2000 to 2002 : LGE 50% vs. Industry 1%
World top-class PDPmaker / Leader in Digital TVdevelopment
LG.Philips LCD ahead of competition in 5G TFT-LCD production
Globally securing a top-tier position in major products
(Optical storage, Monitor etc.)
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Product Leadership in Key MarketsProduct Leadership in Key Markets
LGE has built up
its presence in
the global
market by taking
number one
position in many
product areas
Global Market Share in 2002(E) Korean Market Share
Air Conditioner *Air Conditioner *OpticalOptical
StorageStorage
11CRTCRT
No.1No.1No.1
15.4% 21.4% 27.0%
MonitorMonitorCDMACDMA
18.0%
TFTTFT--LCDLCD
2210.4%17.0%
336.4%
* Based on Package Air conditioner
Source: DisplaySearch, LSI, IDC, LGE
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Performance HistoryPerformance History
Sales has grown
steadily despite
the economic
turmoil Sales(Unit : W tril.)
Sales : W18.4 ~ 18.5 tril.
(15% ~ 16% yoy growth)
Operating Profits : 6.4~6.5%
(more than 50% growth yoy)
Recurring Profits : Dramatic
improvement in equity method
accounts
(W902 bil. loss in 2001)
2002 Target
16.6
10.5
6.1
14.8
9.9
4.910.59.9
7.8
2.7
7.3
2.6
1998 1999 2000 2001
Export Domestic
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1.8 1.5 1.6
4.2
2
54.5
2.4
2
0.1
0.2
0.7
Strong sales
in US CDMA
2domestic
'01 1H '01 2H '02 1H '02 2H(E)
CDMA
export
GSM
Export
4.2
5.7
6.8
9
(unit: million units)Advance into
Europe and China
Achievement Outlook
Handset Performance and OutlookHandset Performance and Outlook
CDMA so far led the growth. GSM will be next growth driver
Full launching of EVDO and WCDMA market in Korea
CDMA : US market to move to color phones,
Demand growth in China and India Color phones to lead robust GSM sales
CDMA in US : Secured #1 supplier
position to major operator
Groundbreaking effort to GSM market launched LG Brand
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Global Market Share
LGE is now 6th in the global market with 2nd place in the CDMA handset market.
Europe, China, and India are next growth areas.
Global Handset Makers Status
Worldwide Handset M/S* Worldwide CDMA Handset M/S
2002 1H20012002 1H2001
1 Samsung 30.9%
2 LG 17.7%
3 Motorola 12.3%
4 Nokia 11.3%
5 Kyocera 10.6%
1 Samsung 23.3%
2 LG 18.9%
3 Motorola 17.3%
4 Kyocera 13.2%
5 Nokia 12.3%
1 Nokia 36.3%2 Motorola 16.5%
3 Samsung 10.1%
4 Siemens 8.8%
5 SEMC 5.8%
6 LG 3.6%7 Alcatel 3.2%
8 Kyocera 2.2%
9 Mitsubishi 2.1%
10 NEC 2.1%
1 Nokia 35.6%2 Motorola 14.9%
3 Samsung 7.3%
4 Siemens 7.3%
5 SEMC 7.1%
6 NEC 2.9%7 M itsubishi 2.9%
8 Panasonic 2.7%
9 Alcatel 2.6%
10 LG 2.5%
*Source : Strategy Analytics, August 02
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2H Expectation - CDMA
Sequential drop in 4Q especially from US expected 87% in domestic market and 24% in export expected to be color phones
Color-Screen Sales Trend
Domestic
Export
0%
13%
24%
'02 2Q '02 3Q '02 4QE
0%
45%
69%
87%
'01
2Q
'01
4Q
'02
2Q
'02
4QE
0
1,9012,588
2,685
1,900
958
6461,065
1,100
1Q 2Q 3Q 4Q(E) 2002(E)
CDMA Performance in 2002
Export
Domestic
9.1M
3,8M
2.9M
3.2M3.8M
3.1M 12.9M
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2H Expectation - GSM
GSM business offers great opportunities for LGE to be in a global top-tier handsetmaker by 2005.
Product Leadership
-Export launch from selected hit products in Korea
-Maximize synergy between GSM and CDMAbusiness
Performance Overview
(Unit: thousand)
Technology leadership- Utilize multimedia technology from Display &
Media division
Enhancing Brand Power- Targeting mid to high market
- Utilize high brand power in Europe and China
Total 2.6M units in 2002
LGEs Strength
1Q 2Q 3Q 4Q(E)
260
480
750
1,100
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LGE as a top CDMA maker
LGE succeeded in Korea, a toughest test ground for new tech with fastidious customers.
LGE has outstanding competitiveness in ever-changing world handset market with its
Innovation, customization and product differentiation capability.
Market - Change in Game Rule LGEs Competitiveness
97~00 Scale Game - Moderate Quality
- Low Price
00 ~ Scale +
Exciting Products
- Excellent design
- Multi media
[ Service operators ]
[Handset customers]
Profit aggravation of service operators
Increasing desire for better design
and new tech
Rapid product development time
- Short product lead time of 8.5 months
- More diverse model portfolio vs. competitors
Vertical integration
- Ability to leverage product development of
Display and Media Tech divisions
Innovative and smart designs
Successful customization with major
operators
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Going ForwardGoing Forward
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Diversified Product PortfolioDiversified Product Portfolio
LGE will
continue to
move up to the
value chain by
allocating
resources into
future business
Product Life Cycle
Optical Storage
Handsets
Digital TV
PDP
OLED
Profitability
Home Appliances
Time
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Balanced ContributionBalanced Contribution
Operating Profit Up to 3Q 20022001 Operating Profit Breakdown
Handset&
System
21%
Appliance
50%
Display&
Media
29%
Handset&
System
19%
Appliance
62%
Display&
Media
19%
More balanced
income from
each sector
projected
Major contributor
- GSM / CDMA handset
- TV LCD and PDP TV
- Optical Storage
- Other Premium Products
Major contributor
- Package Air conditioner
- Refrigerator
- Optical Storage
- TV
- CDMA handsets
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Stronger Balance SheetStronger Balance Sheet
Having strong
balance sheet is
the first priority
of LGE.
LG Electronics Debt (KRW trn)
4.94 3.6 3.1
118%
95%
128%
97%
50%
2000 2001 After Demerger 3Q 2002 2005E
Debt D/E Ratio
Level
A strong balance sheet is a prerequisite for a global player
For stable growth and investment, LGE will reduce current 97%
gearing level down to 50% level by 2005
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Key SummaryKey Summary
With strong growth in GSM and color phones, handsets has contributed to the
overall margin improvement
- GSM : Explosive growth (grew 877% YoY, 38% QoQ in 3Q02) with highly improved profitability
- Domestic : Product leadership (OLED, EV-DO Phones) / Full product line-up,
leading to market share expansion
Ongoing growth of Home Appliance in sales and profitability
- Sales has shown over 20% CAGR since 1998 with more than 10% op margin
- Premium products have driven the growth, maintaining market leadership
Level-up in PDP business with a possible turnaround in System business in 2003
- PDP : Visible demand growth with reliable yield improvement
- System : Better profitability from W-CMDA sales and business rationalization
Continuing cost innovation and restructuring to improve profitability
- Business rationalization in Monitor, PCB and Telecom System
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Thank YouThank You
www.lge.com
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