LG Chem Ltd. · KRX:051910
LG Chem — Q2 2006 Earnings Presentation
18 slides from LG Chem's earnings presentation, Jul 13, 2006
Slide 1: 2Q 2006 Business Results & Outlook
2Q 2006 Business Results & Outlook July 13, 2006
Slide 2: Audit review and forward-looking notice
The business results for the 2nd quarter of 2006 currently under audit review are presented here for investors’ convenience. Hence, please be advised that some of their contents may be altered in the course of audit. Forecasts and projections contained in this material are based on current business
Slide 3: Table of Contents
Table of Contents 2Q 2006 Business Results 1 Divisional Results & Outlook 3 Subsidiaries’ Results & Outlook 6 Business strategies 7 Appendix 12
Slide 4: 2Q 2006 Business Results Income Statements
2Q 2006 Business Results Income Statements Non-Consolidated Consolidated (Unit:KRW bn) ’05 2Q ’06 2Q ’06 1Q QoQ ’05 2Q ’06 2Q ’06 1Q QoQ Sales 1,795.7 2,272.5 2,129.1 6.7 2,655.2 2,850.7 2,634.8 8.2 Operating Profit 85.6 48.0 65.6 178.7 88.5 140.5 26.8 37.0 (%) (4.8) (2.1) (3.1) (6.7) (3.1) (5.3) Re
Slide 5: 2Q 2006 Business Results Balance Sheets
2Q 2006 Business Results Balance Sheets Non-Consolidated Consolidated (Unit:KRW bn) ’05 ’06 2Q ’05 ’06 2Q Assets 5,593.4 5,531.1 7,291.3 7,213.8 (Cash and equivalents) 189.4 142.0 608.0 295.1 Liabilities 3,154.9 3,102.2 4,221.8 4,189.0 (Borrowings) 1,865.4 1,650.0 2,614.8 2,520.1 Shareholder’s Equit
Slide 6: Divisional Results & Outlook: Petrochemicals
Divisional Results & Outlook Petrochemicals Business Results Analysis & Outlook (Unit:KRW bn) • Analysis - Annual maintenance shut down in Yeosu for 3 weeks 1,429.6 1,364.8 - Strong raw material (CFR Taiwan) · Naphtha MOPJ : U$ 550 (1Q ’06) 616 (2Q ’06) (CFR Japan) 1,050.5 · Ethylene : U$ 1,060 1,09
Slide 7: Divisional Results & Outlook: Industrial Materials
Divisional Results & Outlook Industrial Materials Business Results Analysis & Outlook (Unit:KRW bn) • Analysis 535.5 543.3 - Due to seasonal demand, sales increased in the Building/Decorative 476.0 division by 25% QoQ. - Sales has improved in PVC window flames and floorings · PVC Window Flames : 35%
Slide 8: Divisional Results & Outlook: I & E Materials
Divisional Results & Outlook I & E Materials Business Results Analysis & Outlook (Unit:KRW bn) • Analysis 370.4 361.2 - Even though solid sales growth from improving utilization Battery was achieved, BEP failed to be met 277.0 - No improvement in business due to price pressure and " $ # Optical the
Slide 9: Subsidiaries' Results & Outlook
Subsidiaries’ Results & Outlook Business Results Analysis & Outlook ’05 2Q ’06 2Q ’06 1Q (Unit: KRW bn) Sales 491.9 450.3 513.4 LG Petrochemical - Worsened profit due to the maintenance LG Operating 57.8 11.2 42.2 Petro- Profit - Positive 2nd half results are expected thanks to NCC revamping (11.7)
Slide 10: Business strategies: Basic strategies and Long-term target
Business strategies Basic strategies and Long-term target “To be a global leader - Growing with customers by providing Innovative materials and solutions” Basic strategies Long-term target (Unit: KRW tn) CAGR Petrochem Petrochem • Maximizing cash flow from the current business 7.4 10.8 13.0 12% I&E
Slide 11: Business strategies: Petrochemicals
Business strategies Petrochemicals Business strategies Action plans Improving profit ability through vertical integration • Rationalizing inefficient facilities Down-turn Down-turn • Liquidating marginal business • Securing raw materials by strategic alliance with Counter Counter plan plan • Finding
Slide 12: Business strategies: Industrial materials
Business strategies Industrial materials Business strategies Action plans Advanced business structure through high functional Building/Decorative product mix • Premium integrated interior brand: “Z;in” • Building/Decorative : Brand integration and enlargement • Eco friendly and high-end product sale
Slide 13: Business strategies: I & E materials
Business strategies I & E materials Business strategies Action plans Display materials Business domain • Expanding the business area reflecting the customers’ needs • Polarizer • Offering the differentiated value (High-end products, etc.,) Display • PDP filter Clean-energy materials materials • CFPR
Slide 14: Business strategies: R&D
Business strategies R&D Business strategies Action plans Pursuing performance oriented R&D • Enlarge functional film business by applying Display Display coating, adhesion, processing technology • Strengthen IT & electronic material research • Meet key customers’ request • Create value by acquiring
Slide 15: Appendix: Sales & Operating Profit
Appendix Sales & Operating Profit (Unit : KRW bn) 2005 2006 1Q 2Q 3Q 4Q Sum 1Q 2Q 3Q 4Q Sum Sales 1,868.9 1,795.7 1,849.8 1,910.7 7,425.1 2,129.1 2,272.5 4,401.6 Operating Profit 141.4 85.6 92.1 102.6 421.7 65.6 48.0 113.6 Petrochemicals 1,160.7 1,050.5 1,069.5 1,046.5 4,327.2 1,364.8 1,429.6 2,794.
Slide 16: Appendix: Borrowings & Cash Flow
Appendix Borrowings & Cash Flow Borrowings Cash Flow (Unit : KRW bn) (Unit : KRW bn) Balance ’06 (P) ’05 ’06 1H ’05 ’06 1H Changes 1,865.4 1,650.0 215.4 1,766.0 Total Net Income 400.3 113.2 (100%) (100%) (100%) KRW 1,529.8 1,270.7 259.1 1,359.8 Depreciation 344.5 255.3 Currency (82%) (77%) (77%) C P
Slide 17: Appendix: Capex Plan & Results
Appendix Capex Plan & Results (Unit : KRW bn) ’04 Results ’05 Results ’06 Plan ’06 1H New/Expansion 11.8 23.7 127.4 26.1 Maintenance 52.7 69.1 81.3 47.7 Petrochemicals Equity Investment 6.6 41.2 28.5 19.6 Total 71.1 134.0 237.2 93.4 New/Expansion 4.9 17.1 42.8 1.2 Industrial Maintenance 42.7 49.1 44
Slide 18: Appendix: Price Trend
Appendix Price Trend Vinyls Styrenics (Unit:U$/MT) (Unit:U$/MT) 1,497 1,469 1,480 1,099 1,090 1,437 1,067 1,060 1,412 1,043 1,364 1,364 1,384 1,330 945 970 1,237 898 1,185 841 887 1,160 841 818 1,123 1,115 1,084 1,075 760 786 1,023 1,041 834 798 984 987 740 732 775 933 775 786 723 902 790 740 850 86