Presentation is loading. Please wait.

Presentation is loading. Please wait.

New Initiative Clean and Beautiful. Highlight ◆ started its operation as Rakhee Chemical Industry in 1947 and has evolved as ‘a company of the Korean.

Similar presentations

Presentation on theme: "New Initiative Clean and Beautiful. Highlight ◆ started its operation as Rakhee Chemical Industry in 1947 and has evolved as ‘a company of the Korean."— Presentation transcript:

1 New Initiative Clean and Beautiful

2 Highlight ◆ started its operation as Rakhee Chemical Industry in 1947 and has evolved as ‘a company of the Korean people’ which offers wide range of products from personal/home care products(tooth- paste, soap, shampoo, detergents, and etc.) to cosmetics, ◆ played a role as a footstep of the constant growth of LG Group including LG Chemical with dominant market position and stable earning growth, ◆ recorded annual sales growth rate of 8% and maintained operating margin of 10% despite the financial crisis(1998~2000) of Korea owing to its continuous commercialization of differentiated products supported by extensive R&D activities and total logistics which integrate production, sales, and distribution, ◆ demerged from LG Chemical as a new entity specialized in household products and cosmetics, ◆ will elevate corporate value and maximize shareholder value as a dominant player with incomparable competitiveness, and will pave the way towards a Super-Excellent Household & Health Care Company realizing customers’ dreams to be clean, healthy, and beautiful while enriching lives of consumers, shareholders, and employees, always with them. LG Household & Heath Care

3 Ⅰ. The Company Ⅱ. Vision Ⅲ. Corporate Strategies and Growth Target Ⅳ. Business Results and Strategies Ⅴ. Financial Highlight Outline

4 Ⅰ. The Company

5 Company Profile Established in 1947, LG H&H has positioned itself as the largest company in the domestic household products and cosmetics markets. ■ Brief History Yr 1947 Rakhee Chemical Industry established → Yr 1954 Produced ‘Lucky toothpaste’ → Yr 1966 Commercialized synthetic detergents → Yr 1969 Went public → Yr 1974 Changed corporate name to ‘Lucky’ and established Ulsan plant → Yr 1980 Built Cheongju Plant → Yr 1984 Commercialized cosmetics → Yr 1995 Changed corporate name to ‘LG Chemical’ → Yr 2001 Demerged from LG Chemical and established as LG H&H ■ Business Domains · Household Products : Personal Care, Home Care · Cosmetics : Basic Care, Make-up & Special Care ■ Plant : Cheongju Plant(household products, cosmetics), Ulsan Plant(household products) ■ Distribution Network : 14 warehouse centers, 180 sales agents for household products and 200 for cosmetics ■ Number of Employees : 3,400 ■ Overseas Subsidiaries · Manufacturing Subsidiary - 2 in China(toothpaste, cosmetics), 3 in Southeast Asia(shampoo, cosmetics) · Sales Subsidiary - 1 in China and 1 in USA(household products, cosmetics) · R&D Subsidiary - 1 in China(natural substance) 1/14

6 Business Domain LG H&H engages in household products and cosmetics businesses, securing market presence as the dominant leader. 2/14 Household Products (Since 1954) Personal Care Home Care Basic Care Cosmetics (Since 1984) Make up & Special Care & ■ Toothpaste ■ Soap ■ Shampoo/Conditioner ■ Diaper ■ Laundry Detergents ■ Kitchen Detergents(Dish-washing) ■ Fabric Softener ■ Cleansing ■ Essence ■ Skin Toner/Softener ■ Cream ■ Foundation, Powder ■ Two Way Cake, Lipstick ■ Whitening ■ Wrinkle Care ‘LacVert’ ‘ISA KNOX’ ‘OHUI’ ‘HERCYNA’ ‘Retem’ ‘Bamboo Salt Urdex’, ‘Clinx’ ‘Say’, ‘Sense’ ‘Double Rich’, ‘Novid’ ‘Maman’ ‘One Scoop’ ‘Pon Pon’, ‘Safe’ ‘Sayfran’ Major Products Major Brands

7 Results Over the past 3 years, sales has shown CAGR of 8.5% and recurring profit will surge to exceed krw 100 bn by 2001. Sales & EBITDA Sales EBITDA ‘98 ‘99‘00 ‘01(E) 816 884 965 1,062 (krw bn) Recurring Profit & Margin Profit Margin ‘98 ‘99‘00 ‘01(E) (krw bn) 31 61 79 105 (%) 3/14 133 154 124 121 8.1 9.9 3.7 6.9

8 Core Competence From NPD * to logistics, LG H&H has been accumulating core competencies to create values and will further enhance them to be world-class. 4/14 * NPD : New Product Development NPD - Operate self-designed NPD Process and 7 NPD principles - Integrate tech and brand by MGPD - Effectuate R&D with ‘Vitality Index’ Prompt development of new products supported by intense R&D Customer Relations - Develop new services and sales promotions as a leading company - Implement various programs to vitalize customer-oriented activities (STAR, JUMP, CORE Program,and etc.) Differentiated service offering and customer satisfaction enlargement Marketing - Brand management through deep analysis of customer and market - Carry out inexpensive marketing as the market leader - Combine customer data and improve advertising & promotion skills Top-ranking brand equity and expanding big brand Logistics - Improve operation of infra system (for control of inventories and cost ) - Co-work with distributors Win-Win strategy of ECR* with customers and cost reduction * ECR: Efficient Consumer Response Core Competencies


10 Vision With world best productivity and quality With world class profitability and financial structure With highly qualified human resources of utmost market value Super Excellence Super Excellence A Super-Excellent Household & Health Care Company to enrich customers’ lives through creating new values A Super-Excellent Household & Health Care Company to enrich customers’ lives through creating new values Vision S S uper Excellence I I nformatization G G lobalization M M anagement by Knowledge A A ction Leadership Renovation SIGMA 21st 5/14 6 Sigma Knowledge Management Leadership - Best quality in product, service, management,and human resource - Breakthrough in management innovation activities - Developing world class core competency through knowledge systematization and reproduction - Founding new business and providing high value-added products and service - Cultivating & taking real transformational leadership - Embodying field-based and performance-oriented culture

11 SIGMA 21st - Long Term Corporate Renovation Program FocusAction Plan 6/14 Facilitate infra systems to share knowledge Accumulate best practice of key knowledge ◆ Knowledge management ◆ Core competence enhancement ◆ Rationalization ◆ Revitalization Combine 6 sigma with existing renovation programs Expand higher value added products and big brands ◆ Competitiveness of distribution enhanced by IT ◆ E-biz diversification Implement ECR/DB Marketing/ERP Launch beauty care business on the internet ◆ Profitable overseas business ◆ World-class management Focus on selective brands by region Upgrade MIS of overseas subsidiary and Global R&D network Operate CMU/AMU Differentiate rewards based on performance ◆ High performing culture ◆ High motivating rewards M M anagement by Knowledge S S uper Excellence I I nformatization G G lobalization A A ction Leadership

12 Ⅲ. Corporate Strategies & Objectives

13 LG H&H will challenge the changes in market situation with 3 principal strategies. Strategies Customer & Market ◆ Change in consumer behavior - Diversification of customer needs - Enhanced buying power of teenagers and expansion of silver market ◆ Sluggish market growth due to depressed economy ◆ Drastic restructuring of distributors - Convenience stores on the increase - Supermarkets/Shops to be large-sized and form sales network Competitors ◆ Aggressive operation of multinational companies - Household products : P&G, Unilever - Cosmetics : Shiseido, Kanebo ◆ Local makers’ selective concentration - Pacific : cosmetics, shampoo, toothpaste - Aekyung : toothpaste, detergents, cosmetics ⅰ ) Focus on profitability and cash flows ⅱ ) Acquire globally-competitive core competencies ⅲ ) Develop higher-value-added products and new businesses Strategies 7/14

14 Growth Target LG H&H is aiming at sales of CAGR 11.6% and recurring margin of 13.1% by 2003. Sales 01(E) 03(E) 1,062 1,340 38% 42% 62% 58% (krw bn) CAGR 11.6% RP(Margin) 150 (11.2%) 105 (9.9%) (krw bn) 8/14 Cosmetics Household Products 165(12.3%) 123 (11.6%) OP(Margin)

15 Ⅳ. Business Results and Strategies

16 ① Results Sales of household products has increased by 6.2 % p.a. and LG H&H is maintaining No.1 M/S in the domestic market. Household Products Sales 98 99 00 01(E) (krw bn) 541 602 624 662 Market Share L G 50.6 Pacific 18.4 Aekyung 16.8 Others L G 36.5 Aekyung 24.8 CJ 20.9 Others L G 45.6 Aekyung 32.7 CJ 14.4 Others L G 41.0 Dong San 12.5 Pacific 12.7 Others L G 28.9 Pacific 20.4 Aekyung 16.5 Others Toothpaste Laundry Detergents Kitchen Detergents Soap Shampoo ☞ Nilson Data (Year 2000) 9/14 Unilever 9.6 P&G 15.0

17 - Develop hit brands and accumulate brand equity through NPD process and brand management - Expand ECR system for new distribution channels ② Strategies Backed by strong market position, LG H&H will elevate profitability and pioneer household products market with hit brands in a stream. 10/14 Secure leadership in major businesses and growing channels - Develop new categories and focus on them · junior products, hair-dyes, body cleansers, anti-depilatory agents, and etc. - Enhance wholesale distribution business · outsourcing of hit brands and strategic alliances with foreign/domestic companies Seek growth engine for sustainable growth - Activate TCR projects and accelerate production innovation - Reduce manufacturing costs incessantly and allocate marketing expenses efficiently Strengthen cost competitiveness

18 Cosmetics ① Results Sales has surged by 13.3% p.a. despite the financial crisis in Korea and LG H&H’s status in cosmetics market has risen to be strong No.2 player. Sales (krw bn) 98 9900 01(E) 275 282 341 400 Market Share 11/14 98 99 00 LG H&H→ Market Size * Market exclusive of door-to-door sales 16.9% 15.0% 15.6% 1,650 1,765 1,910 (krw bn)

19 LG H&H will strengthen growth momentum to be No.1 player in cosmetics by expanding leading products and differentiating strategies by distribution channel. ② Strategies 12/14 Enhance product leadership Differentiate strategies by distribution channel ◆ Attain No.1 market shares 2000 Two-way Cake 2001 Wrinkle Care, Whitening 2002 Lipstick 2003 Essence ◆ Increase ‘Big Brands’ ◆ Cultivate ‘Blockbusters’ - LacVert or ISAKNOX to exceed krw100 bn in sales - Over 10 brands to exceed krw 10 bn in sales respectively - ‘LacVert’, ‘ISAKNOX’, ‘HERCYNA’, ‘OHUI’, ‘Retem’, and etc. ◆ Shop - Narrow the gap between No.1 player and LG H&H - Concentrate on ‘LacVert’ and ‘ISAKNOX’ - Run clubs for shoppers ◆ Mass Market - Maintain No.1 market shares in new distributors such as large discount store - Focus on ‘Retem’ ◆ Department Store - Diversify customer DB marketing - Focus on ‘OHUI’ ◆ Sales Agent - Launch personalized marketing - Differentiate marketing by customer’s skin type

20 Ⅴ. Financial Status

21 Key Financials (krw bn, except per share data) 13/14

22 Debt Reduction Cash generated from business operations will be spent primarily on repayment of borrowings. Debt Reduction (krw bn) 01.1Q 01(E)02(E) 03(E) 264 186 141 77 Cash Flows 01(E)02(E) 03(E) 128 163 88 49 139 86 78 53 75 Cash-in Cash-out Net Cash Flows (krw bn) * Excluding 1Q results * 14/14 Debt to Equity Borrowings 219% 168% 114% 71%

23 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 not limited to, such factors as general economic conditions, foreign exchange fluctuations, and any change in the relevant laws and regulations.

Download ppt "New Initiative Clean and Beautiful. Highlight ◆ started its operation as Rakhee Chemical Industry in 1947 and has evolved as ‘a company of the Korean."

Similar presentations

Ads by Google