LG Electronics

February 2008
Disclaimer

This presentation was composed utilizing the data released on the dates shown, consequently
reflecting management views according to the dates. All information in this presentation regarding the
company’s financial results has been prepared on a parent (unconsolidated) and/or global
(consolidated) basis as indicated, in accordance with the Korean GAAP. Sales information includes
transactions of the company to and from its subsidiaries and affiliates, but excludes transactions of the
Company’s subsidiaries and affiliates to third parties. This presentation includes forecasting
statements in regards to the company’s outlook on the future, including projected sales. These
forecasting statements are based on the company’s results on a parent (unconsolidated) and/or global
(consolidated) basis as indicated. These forecasting statements are subject to known and unknown
risks and uncertainties that may arise, and actual results may vary. Risks and uncertainties
aforementioned are not limited to risk factors noted in the company’s earnings releases and company’s
filings with the Financial Supervisory Commission of Korea. The company assumes no obligation or
responsibility to update the information provided in this presentations in correspondence to their
respective dates.
Contents

Ⅰ. Business Overview

Ⅱ. Home Appliances

Ⅲ. Mobile Handset

Ⅳ. Digital Display
Ⅰ. Business Overview
 LGE Business Domain

LG.Philips LCD
LG Electronics
LG.Philips Displays

Mobile
29% Digital Appliance 31% Digital Display 13% Digital Media 27% Communications

Air
Others Others Network
conditioner PCB 3%
13% 3%
34% 4%

Living PDP
11% PC
11%
21% OS
Monitor
36%
31% TV
Handset
64% Media
Washing 93%
43%
Machine
21% Refrigerator
25%

*Based on LGE Global (LGE parent + overseas subsidiaries) sales in 2007

*Digital Display breakdown by product is adjusted for PDP internal sales
5
Growth & ROIC
¾ Goal is to improve ROIC to over 20% by year 2010
¾ Various ways to improve ROIC:
Improve profitability, discard unnecessary assets, increase efficiency, etc.

Key Financial Indexes

Sales 26%
Growth
Over 20%

ROIC
19.8%
12%

11% 12% Over 10%

9.9% 11.8%
7.5%

2004 2005 2006 2007 2010

* Sales Growth based on LGE Global (LGE Parent and LGE overseas subsidiaries) in USD.
* ROIC is Based on LGE parent 6
Improvements in Financials
¾ Great improvements in capital structure
¾ Cash flow used for debt reduction
¾ Goal is to reduce global net-debt to equity ratio to below 70%

Net Debt Trend EBITDA /CAPEX

(KRW tril) (KRW tril)

10 2.5
179%

8 146% 2

6 106% 104% 1.5

4 71% 1
7.3
6.4 6.2
6.2
2 5.1 0.5

0 0
2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Global Net Debt Global Net-debt to Equity EBITDA CAPEX

* Based on LGE Global

7
Building Brand Awareness
¾ Redefining “LG Electronics” brand to premium markets
¾ Product-led marketing strategy: Handsets Æ Appliances Æ TV

Branding Synergy Brand Awareness (USA)

90

75
65
50

42
Aided 33
20 23
15
10
Unaided

‘03 ‘04 ’05 ’06 3Q ’10E

* AC Nielsen, Brand Survey ’06 3Q

8
Ⅱ. Home Appliances
LGE: Leading Global Appliances
¾ Sales growth over 16% CAGR
¾ “Innovative products with great design”
¾ LGE is global #3 in terms of sales but #1 in terms of profitability

Global Sales

Sales
Whirlpool
Target
CAGR 16% Zone
Eletrolux

LG

Export

Domestic

'03 '04 '05 '06 '07 Profitability

10
LGE: Global Leader
¾ Targeting global #1 in appliances
¾ Steadily growing in developed markets (U.S., Europe)
¾ Strong leader in emerging markets

U.S. Distribution Channels

Sales
Joined forces with U.S. nationwide retailers 2010
- 2004 : Best Buy
- 2005 : Home Depot
- 2007 : Sears
- 2008 : Regional Channels
2006
Europe & others

EU channels: DSGi, KESA, etc.

Market share in emerging countries

India: 27%
CIS: 11%
Brazil: 5%
Profitability

11
Success in the U.S.
¾ LGE is positioned in the mass premium market (ASP $1000~$1400)
¾ Growth from Sears, Home Depot and Best Buy entry - major U.S. distributors
¾ Innovative products: Allergy care steam washing machines in various colors, etc.

U.S. Appliance Market LGE U.S. Appliance Sales

(US$)
(US$ M) CAGR

2,471 25%
2,185

1,670 41%
65%
57%
1,217 44%
1,060
38%
LG 40%

60% 62% 56% 43% 35% 9%

OEM

ASP: 400 800 1200 1600+ '03 '04 '05 '06 '07
Source: Stevenson ’06 1Q
12
Expanding our CAC Business
¾ Commercial Air Conditioner - new market for LGE
¾ B2B business, infrastructure and after service is important
¾ CACs using new energy solutions: Eco-design, reducing environmental impact

Global A/C Market LGE A/C Sales

CAC
CAGR 20% 27% 45%
Portion
54.0 6% CAGR
45.3 5.1 12%
(U$ Bn) 43.0
(U$ Bn)
Total Total 4.1
35 8% 30%
3.2 2.3
26 27.8 1.1
CAC
CAC 0.8

3% RAC 3 2.8 3%
RAC 19 2.5
17 17.5

2006 2007E 2010E 2005 2007 2010E

Source: Company data Source: Company data
13
Success Factors
¾ Emphasis on R&D Æ Innovative new products
¾ Highly efficient low cost production bases (China, India)
¾ Focusing on three major premium products: A/C, washing machines and refrigerators

Emphasis on R&D Global Production Focus on High-end

Emphasis on R&D Producing high-end Focusing on 3 Major

Æ product leadership products in Korea profitable products

Technological leadership - Utilizing China as low-cost Increasing premium product

generated by vertical production base proportion
integration of key
components
Others
4% Korea Washing
A/C Refrigerator
A/C Asia 34% machine
Compressor 6%
Ref. In-house
production China
55%
W/M Motor

* Based on quantity, 2007

14
Ⅲ. Mobile Handset
Market Update
¾ Emerging market is leading the handset demand
¾ Limited growth from CDMA
¾ Increase of 3G and GSM portion

Global Demand Demand by Technology

Others (mn units) GSM (mn units) CAGR*
E.Europe CAGR* CDMA
CS.America WCDMA/ HSDPA
1,211 16% 1,211
N.America Others
1,123 1,123
W.Europe 28%
Asia 998 998 92%
13%
833 23% 833

677 8% 677

5% 13%

20%
9%

2004 2005 2006 2007 2008E 2004 2005 2006 2007 2008E
* Source : Strategy Analytics
* CAGR : based on 2004 ~ 2007
* CAGR : based on 2004 ~ 2007
16
Stable Handset Business
¾ In 2007, LGE showed handset stability and margin recovery (8.6%)
¾ Shipment reached historic high of 80.5 million units in 2007
¾ Continuing the success of “Black Label” & “Blue Label” series

Shipment Sales & Margin

(mn units) CAGR (KRW tril)
8.6%
WCDMA
6.3%
80 31% 4.8%
GSM
4.5%
Margin
CDMA 29% recovery
64 1.3%

55
55%
44

27 9.6
8.4 8.4 9.0
14%
5.2

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
* Source : Company data ** based on LGE Parent sales and operating margin
** CAGR : based on 2003 ~ 2007 except for WCDMA
17
Handset Growth
¾ Successful entry into GSM open market with “Chocolate”
- “Chocolate” shipment reached 7.5M units in 2006, over 4M units in GSM
¾ Expansion of 3G customer base : Vodafone, AT&T, etc.

Stabilization through Diversified Profit Portfolio

2005 2007

Successful entry into GSM market

Others Others
• Chocolate 7.7m in 2007
• Shine and Viewty in 2007 U.S. CDMA
35%
GSM Open
Verizon (CDMA) Wider 3G customer base 30%
& Hutchison (3G)
• Vodafone, AT&T, 3, etc 3G Total
80%
20%
• Winner of GSMA’s “3G for All” project

18
Future Direction
¾ ASP improvement just as important as growth
¾ Increased concentration on high-end handsets
¾ “LG” Brand identification through design

Long-term Goal
Global “Hit Product”
• Enhance design
• “User-centric” product development
H
• Improve market research capability

Two tier marketing strategy

ASP

• Operator centric strategy for CDMA

• Open market strategy for GSM
Motorola
Nokia

Raise blended ASP

L
• Take advantage of “Korea test market”
L H
Volume • Expand 3G models and carriers
• Move up in GSM market

19
Ⅳ. Digital Display
Soaring FPD Demand
¾ Flat Panel technology became mainstream in the TV market
¾ Larger-size demand increasing rapidly backed by steep price erosion,
and prevailing HD contents

TV Demand Demand by Size

(mn units) (mn units)

220 220
205 210 210
195 195 205 50”↑
190 190
CRT 40”~49”

30”~39”

FPD
68% (%)
66%
55% 30”↓
44%
29%

'06 '07 '08E '09E ‘10E '06 '07 '08E '09E ‘10E

Source: TSR, DisplaySearch, Company data Source: TSR, DisplaySearch, Company data 21
Display Strategy
¾ Strengthen brand and competitiveness to improve profitability
- Invest in Brand : Increase marketing expenditure in selective markets: US, EU
- Strengthen Competitiveness : Cooperative product design and development with
affiliates, providing consumers with the best product portfolio

Invest in Brand Strengthen Competitiveness

Build LG as premium TV brand Product design and development

Increase marketing expenditure TV - LCD cooperation with LPL
on selective markets : US, EU - PDP cooperation with LG-Micron

Synergy
PDP LCD
Premium pricing panel panel Deliver optimized product lines
Improve profitability of both - Possession of both PDP and LCD
TV sets and Panels Æ competitive advantage

“Improve Profitability”

22
http://www.lge.com
Appendix Divisional Sales & Profit (Parent)

(Unit :KRW bn)

1Q'06 2Q'06 3Q'06 4Q'06 FY06 1Q'07 2Q'07 3Q'07 4Q'07 FY07
YoY YoY
Sales 1,563 1,529 1,363 1,283 5,738 1,819 1,789 1,339 1,189 -7.4% 6,135 6.9%
DA Op. Profit 160 150 58 62 430 218 173 65 55 511
(%) (10.2%) (9.8%) (4.3%) (4.9%) (7.5%) (12.0%) (9.7%) (4.8%) (4.7%) (8.3%)
Sales 1,446 1,443 1,725 1,212 5,825 1,214 1,093 1,389 1,441 19.0% 5,137 -11.8%
DD Op. Profit 30 21 43 -147 -54 -194 -265 -160 -96 -714
(%) (2.0%) (1.4%) (2.5%) (-12.1%) (-0.9%) (-16.0%) (-24.2%) (-11.5%) (-6.6%) (-13.9%)
Sales 770 641 665 663 2,738 713 613 698 688 3.8% 2,712 -0.9%
DM Op. Profit 23 11 8 -20 22 6 -17 15 -6 -2
(%) (3.0%) (1.8%) (1.3%) (-3.1%) (0.8%) (0.8%) (-2.7%) (2.1%) (-0.9%) (-0.1%)
Sales 2,050 2,211 2,326 2,370 8,958 2,300 2,423 2,283 2,567 8.3% 9,573 6.9%
MC Op. Profit -9 21 98 72 182 155 265 181 209 809
(%) (-0.4%) (0.9%) (4.2%) (3.0%) (2.0%) (6.7%) (10.9%) (7.9%) (8.1%) (8.4%)
Sales 1,855 2,032 2,149 2,204 8,240 2,136 2,253 2,131 2,422 9.9% 8,942 8.5%
Handset Op. Profit -31 -3 79 58 103 141 254 170 200 765
(%) (-1.7%) (-0.1%) (3.7%) (2.6%) (1.3%) (6.6%) (11.3%) (8.0%) (8.3%) (8.6%)

Sales -286 -275 -242 -73 -876 -122 -141 -187 -97 -547
Others
Op. Profit -126 -123 -103 -102 -454 -108 -107 -86 -82 -384
Sales 5,800 5,796 6,054 5,520 23,171 6,034 5,903 5,690 5,875 6.4% 23,502 1.4%
Total Op. Profit 191 190 197 -43 535 173 146 92 154 565
(%) (3.3%) (3.3%) (3.3%) (-0.8%) (2.3%) (2.9%) (2.5%) (1.6%) (2.6%) (2.4%)

* Divisional sales includes internal transaction between divisions 24

Appendix Divisional Sales & Profit (Global*)

(Unit :KRW bn)

1Q'06 2Q'06 3Q'06 4Q'06 FY06 1Q'07 2Q'07 3Q'07 4Q'07 FY07
YoY YoY
Sales 2,556 2,969 2,500 2,352 10,376 2,941 3,604 2,785 2,473 5.1% 11,803 13.8%
DA Op. Profit 117 248 107 123 594 169 292 150 107 717
(%) (4.6%) (8.3%) (4.3%) (5.2%) (5.7%) (5.7%) (8.1%) (5.4%) (4.3%) (6.1%)
Sales 2,714 2,786 2,672 3,197 11,368 2,754 2,727 3,170 3,968 24.1% 12,619 11.0%
DD Op. Profit 44 53 70 -97 70 -262 -138 -29 -11 -440
(%) (1.6%) (1.9%) (2.6%) (-3.0%) (0.6%) (-9.5%) (-5.1%) (-0.9%) (-0.3%) (-3.5%)
Sales 1,449 1,242 1,217 1,492 5,401 1,382 1,246 1,336 1,430 -4.1% 5,394 -0.1%
DM Op. Profit 52 11 -4 13 72 11 -4 29 27 62
(%) (3.6%) (0.9%) (-0.4%) (0.9%) (1.3%) (0.8%) (-0.3%) (2.2%) (1.9%) (1.2%)
Sales 2,186 2,302 2,533 2,764 9,786 2,509 2,865 2,635 3,050 10.3% 11,059 13.0%
MC Op. Profit -30 9 46 128 153 121 325 220 267 933
(%) (-1.4%) (0.4%) (1.8%) (4.6%) (1.6%) (4.8%) (11.3%) (8.4%) (8.7%) (8.4%)
Sales 1,998 2,134 2,367 2,599 9,099 2,354 2,709 2,496 2,917 12.2% 10,476 15.1%
Handset Op. Profit -52 -15 26 114 74 110 313 209 257 889
(%) (-2.6%) (-0.7%) (1.1%) (4.4%) (0.8%) (4.7%) (11.6%) (8.4%) (8.8%) (8.5%)

Sales -45 -39 -53 -63 -201 8 -11 -16 -7 -27

Others
Op. Profit -13 -12 -10 -10 -45 -11 -11 -9 -8 -38
Sales 8,860 9,260 8,869 9,742 36,730 9,593 10,430 9,911 10,914 12.0% 40,848 11.2%
Total Op. Profit 171 308 208 157 844 28 464 362 381 1,234
(%) (1.9%) (3.3%) (2.3%) (1.6%) (2.3%) (0.3%) (4.4%) (3.6%) (3.5%) (3.0%)

* Divisional sales pertains solely LG Electronics Korea and its overseas subsidiaries and includes internal transactions 25