The Company 2 ~ 7

Business Review 8 ~ 13

Financial Highlights 14 ~ 16

For a Better Life

Table of Contents

Corporate Overview

Demerger

Corporate Structure

Corporate Strategy

Business Results & Targets

The Company

1947 Established as Lucky Chemical Industrial Co.

1954 Produced Korea’s first toothpaste “Lucky”

1969 Went Public

1974 Changed corporate name to “Lucky”

and built Ulsan Plant

1979 Built Lucky R&D Center

1980 Built Cheongju Plant

1984 Commercialized Cosmetics

1995 Changed corporate name to “LG Chemical”

2001 Demerged from LG Chemical and established as LG Household & Health Care

History

2001 Sales = KRW 1,111 bn

2001 Overseas Sales = U$ 103 mn

Business

[ Sales Breakdown ]

Founded in 1947, LG Household & Health Care (“LG H&H”) has been a basis for the growth of LG Chemical and LG Group. Since 2001’s demerger, LG H&H now focuses on the household and cosmetics business.

* Including pre-demerger 1Q results** Exports + Overseas Subsidiaries’ sales

3/17

**

*

Cosmetics

37% Household

Products

63%

• Skin Care• Make-up• Men’s

• Toothpaste• Shampoo• Soap• Laundry Detergent• Kitchen Detergent• Fabric Softener

Corporate Overview

With the demerger in April 2001, LG H&H’s corporate value and shareholder value should continue to increase.

Structure Positive Effects

Concentrate on core business

Enhance management transparency

Respond quickly to customers’ needs

Corporate and shareholder values to increase continuously

LGCI

LG Chem LG H&H

• Holding Company• Equity Investments• Biotechnology

• Business Subsidiary• Petrochemicals• Industrial Materials, etc.

• Business Subsidiary• Household Products• Cosmetics

DEMERGER

Demerger(Apr.’01) Dec.’01

[ Market Value ]

143%LG H&H

KOSPI26%

693.70

KRW451bn

Demerger

Equity Investments

Old LG Chemical

Petrochem

Industrial Materials

Biotech

Electronic Materials

KRW186bn

552.69

Household Products &Cosmetics

4/17

Myeong Jae Cho, CEO - Born in 1945

- B.A., Seoul National University

- 1969 Joined Lucky Chemical Industrial Co.

- 1997 Charge of H&H Business

- Present CEO of LG H&H

Board of Directors - 3 outside directors out of all 6 directors

Employees : 2,808 people

Shareholder Structure

People

A CEO with professional background and 2,808 employees form the best company structure throughout R&D, production, sales, and logistics. LG H&H’s major shareholder is LGCI.

(End of ’01)

1,235 1,081 295 197

(End of ’01)

ProductionProduction

SalesSales

R&DR&D

LogisticsLogistics

• Household Products Research Institute• Cosmetics Research Institute

• Design Research Institute • Packaging Development Institute• LG H&H R&D Shanghai

• Cheongju Plant – Household Products/Cosmetics Production

• Ulsan/Naju Plant – Household Products Production

• 4 Overseas JVs

• 13 Logistics Centers

• Sales Agents - 190 for Household Products 220 for Cosmetics

• Operation by region/distribution channel

• 1,235 Sales personnel

• 2 Overseas Subsidiaries

Company Structure

Organization

Sales Production R&D Admin.

Employees

28.7% 46.8% 10.3% 14.2%

LGCI Foreigner Institute Retail

Ratio

5/17

Super-Excellent Household & Health Care Company

SIGMA 21st Super Excellence, Informatization, Globalization, Ma

nagement by Knowledge, Action Leadership

Our goal is to become a Super-Excellent Household & Health Care Company by enhancing profitable growth, revitalizing business portfolio, and strengthening market leadership based on「 SIGMA 21st」 .

Strengthening dominant player position in domestic household products market Penetrating the cosmetics market aggressively Accelerating globalization

Reinforcing product development skills

Building brand equity

Improving customer satisfaction through CRM*

Achieving world-best productivity and quality

Continuous restructuring

Efficient allocation of management resources Enhance Profitable Growth

Revitalize Business Portfolio

Strengthen Market

Leadership

Pursuing super

excellence of current business

Cultivating growth engine for the future

Continuously developing core

competences

Corporate Strategy

*Customer Relation Management

6/17

We target KRW 1.2 tn in sales with 10.5% of operating margin and increase of sales contribution of cosmetics.

Business Results & Targets

203(12.5%)

108(9.7%)

1,1111,220

1,620

Operating Profit

(Margin)

Results & Target

128(10.5%)

’01 ’02(E) ’05(E)

CAGR : 10%

37%

63%Household Products

39%

61% 51%

49%

(KRW bn)

Overseas U$ 103mn(12%)

U$ 129mn(14%)

U$ 228mn(19%)CAGR : 20%

* Including sales from Sorbitol business divested in Apr.’01** Exports + Overseas Subsidiaries’ sales

**

*

Cosmetics

7/17

Household Products - Business Strategy - Sales & M/S

Cosmetics - Business Strategy - Sales & M/S

Overseas Business

Business Review

Our goal is to strengthen dominant position in the market by focusing on key product/brand/distribution channel and developing sustainable growth engines.

Household Products 1. Business Strategy

■ Concentrate resources on core product categories - shampoo/toothpaste/fabric softener

■ Cultivate strategic brands in 6 product categories - Perioe/Elastine/Say/One Scoop/Natural Pon/Saffron

■ Increase number of big brands with annual sales over KRW 10 bn - ’01: 16 big brands ’02: 18 big brands

Enhance Market Leadership through Selection & Focus

■ Carry out marketing activities aggressively in discount stores - Concentration of resource

■ Develop strategic models in new channels for early mover’s advantage

Set Channel Strategies Corresponding to Changes in Distribution

■ Speedy settlement in new category markets

- hair dyes/anti-hair loss)

■ Differentiate overseas business strategy by regional market - Developed market (US/Japan) and developing market (Mexico)

Develop Sustainable Growth Engines Continuously

Strengthen No.1 Position in Domestic Market

9/17

Ensuring stable growth, the household products business enjoys an unwavering no. 1 position in the domestic market.

Sales

94

(11.3%)

68

(9.7%)

704740

830Operating

Profit(Margin)

79

(10.7%)

’01 ’02(E) ’05(E)

CAGR : 4%

Sales

(KRW bn)

Market Share

( % )

☞ Neilson Data (’01)

Toothpaste

Laundry

Detergent

Kitchen Detergent

Soap

Shampoo

Fabric Softener

L G 49

L G 36

L G 43

L G 40

L G 27

L G 31

Aekyung

17Others

Pacific20

Aekyung27

CJ21

Others

Others

Unilever

12 Others

Others

Aekyung

11

Pigeon47

Oxy16

Others

Pacific15

2. Sales & M/S

Aekyung

14P&G

18Pacific

20

CJ15

Aekyung34

10/17

Our goal is to strengthen growth momentum to be no.1 in cosmetics by expanding leading brands / products and differentiating strategies by distribution channel / region.

1. 사업전략Cosmetics 1. Business Strategy

■ Increase number of big brands with annual sales over KRW 10 bn - ’01: 8 brands ’02: 11 brands

■ Attain no.1 M/S in specific categories - lipstick/two-way cake/powder/makeup base

Sales over KRW 100bn

· ISAKNOX (’01) · LacVert (’02)

Increase Number of Leading Brands/Products

■ Strengthen leadership in company’s strong channels - specialty cosmetic shops/mass markets

■ Increase M/S in growing channels - direct sales/department store

■ Pursue early settlement in new channels - door-to-door/drug store/hair salon

Differentiate Strategies by Distribution Channel

■ Expand overseas sales network and develop strategic markets in China and Vietnam

■ Enlarge sales channels in Russia/Saudi Arabia and establish new networks in the US market

Develop Distinct Strategies by Region

Strengthen Growth Momentum

11/17

Sales and profit contribution of Cosmetics has grown significantly along with market share increase.

Sales

108

(13.7%)

40

(9.8%)

407480

790

Operating Profit

(Margin)

50

(10.4%)

’01 ’02(E) ’05(E)

CAGR : 18%

Sales

(KRW bn)

Market Share

[Market Size]

1,765

’99 ’00 ’01

1,910

2,060

(KRW bn)

[LG H&H M/S]

2. Sales & M/S

16% 17%19%

12/17

■■

■■■■

■■ ■■

■■■■

Based on distinct strategies by region, LG H&H actively pursues overseas business with particular emphasis on JVs in China and Southeast Asia.

Overseas Business

Country / Est. : China / 1996

Business : Toothpaste Production

’02 Sales Target : U$ 14 mn

LG H&H R&D Shanghai

Country / Est. : China / 1998

Business : Natural Materials R&D

Hangzhou LG Cosmetics

Country / Est. : China / 1994

Business : Cosmetics Production

’02 Sales Target : U$ 15 mn

Beijing LG Household Chemical

LG Vina Cosmetics

LG HAI

Country / Est. : Vietnam / 1997

Business : Cosmetics Production

’02 Sales Target : U$ 16 mn

Country / Est. : USA / 1990

Business : Toothpaste / Detergent / Cosmetics Sales

’02 Sales Target : U$ 15 mn

LG H&H International Trading Country / Est. : China / 2000

Business : Shampoo / Soap / Cosmetics Sales

’02 Sales Target : U$ 11 mn

■■Production JV (4)

■■

■■

Sales Subsidiary (2)

R&D Subsidiary (1)

■■

13/17

Key Financials

Cash Flow

Financial Highlights

[ Key Financials ] [ Borrowings and Interest ]

Backed by strong business results, financial conditions are improving significantly through drastic debt reduction.

Apr.’01 ’01 ’02(E)

(KRW bn)(KRW bn)

* Including pre-demerger 1Q results

Key Financials

Assets

(Fixed Assets)

Liabilities

(Borrowings)

Shareholders’ Equity

(Capital Stocks)

Debt/Equity

Borrowings/Equity

Sales

Gross Profit

Operating Income

Recurring Profit

Net Profit

E P S (KRW)

R O A

R O E

685417

398160

28789

139% 56%

1,220665

128120

835,176

12.3% 29.3%

611402

419264

19289

219%138%

Apr.’01(Demerger)

’02(E)

647414

414205

23389

178% 88%

1,111607

108107

75

4,770

11.6%32.2%

’01

’01 ’02(E)

E B I T D A

Interest Expenses

EBITDA/Interest Expenses

’01 ’02(E)

13521

6.4

15814

11.0

(Demerger)

219%

178%

139%

Debt/Equity(%)

Borrowings(KRW bn)

264

205

160

15/17

Net cash from business operating activities is expected at KRW 45bn in 2002. It will primarily be allocated to improving financial conditions, enhancing market leadership, and paying dividend.

Apr~Dec'01 '02(E)

Cash flow from business 87 85

Net earnings 56 83

Depreciation 21 29

Working capital

Div i de n d

Capital expenditure 28 50

Disposal of assets 13 -

Others 12 10

Net cash flow 84 45

10 △ 9

△ 18

[ Cash Flow ] [ Usage ](KRW bn)

*

* Dividend for fiscal year 2001.

Cash Flow

Improve Financial

Condition

Enhance Market

Leadership

Sustain High Dividend

Payout Ratio

16/17

Thank you!

This presentation contains forward looking statements which are based on management’s assumptions and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in this presentation. Potential risks and uncertainties include, but are limited to, such factors as general economic conditions, foreign exchange fluctuations, and any change in the relevant laws and regulations.

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