2Q11 Earnings Release

July 27th 2011

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All information regarding management performance and financial results of LG Electronics (the Company) during the 2nd quarter of 2011 as contained herein has been prepared on a consolidated basis in accordance with International Financial Reporting Standards (IFRS). In addition, the information regarding results of 2nd quarter of 2011 has been prepared in advance, prior to being reviewed by outside auditors, solely for the convenience of investors of the Company, and is subject to change in the process of final reviewing by outside auditors. The information contained herein includes forward-looking statements in respect to future plans, prospects, and performances of the Company as well as the Companys projected sales plan for the 3rd quarter of 2011. These forward-looking statements also refer to the Companys performance on consolidated base, as indicated. The aforementioned forward-looking statements are influenced by changes in the management environment and relative events, and by their nature, these statements refer to uncertain circumstances. Consequently, due to these uncertainties, the Companys actual future results may differ materially from those expressed or implied by such statements. Please note that as the forward-looking statements contained herein are based on the current market situation and the Companys management direction, they are subject to change according to the changes in future market environment and business strategy. The information contained herein should not be utilized for any legal purposes in regards to investors investment results. The Company hereby expressly disclaims any and all liability for any loss or damage resulting from the investors reliance on the information contained herein.

Table of Contents
. Overview . 2Q11 Results (Consolidated) . Performance and Outlook by Sector

. Overview

Comment on 2Q11 Results

Comment on 3Q11 Outlook

3 1

2Q11 Results

II. 2Q11 Results (LGE Consolidated)

Sales
(Unit : KRW tn)

Sales/Profit

Profit
(Unit : KRW bn)

14.39 13.16
9.3%

0.2%

14.41

1Q11

QoQ

2Q11

YoY

2Q10

Operating Profit

131

21%

158

25%

126

EBITDA

429

8%

462

12%

413

Net Profit

-16

n/a

108

87%

856

1Q11

2Q11

2Q10 5 2

II. 2Q11 Results (LGE Consolidated)

Net Profit
(Unit: KRW bn)

Net Profit

Investment Income
(Unit: KRW bn)

1Q11
Investment income 29 38 41 Net financial expense Tax LG Display

2Q11 6

-48

LG Innotek 158 108 Others

-15

-10

33

Investment Income Op. Profit Net Profit

-56

29

6 3

II. 2Q11 Results (LGE Consolidated)

2Q Net* Cash Flow
(Unit : KRW bn)

Cash Flow Statement

Cash Flow Statement

(Unit : KRW bn)

1Q11 Cash Out

29
Others Increase in working capital Investment income FX effect from foreign currency denominated cash Cash at beginning of period Cash flow from operating activities Net income Depreciation Investment income Increase in working capital Others Depreciation Cash flow from investing activities Cash flow from investing activities 1,944 171 -16 298 56 -368 201 -466

2Q11
2,212 653 108 304 -29 34 236 -669 -388 -148 59 93 -12 31 2,243

236

12

34

304

669

-387 Increase in tangible assets Changes in the scope of consolidation 0

108

Cash In

Net *
-28

Cash flow from financing activities Increase in debt

557 557 6 268 2,212

Net Profit

FX effect from foreign currency denominated cash Net changes in cash Cash at end of period

*Net= Excluding Cash flow from financing activities

7 4

II. 2Q11 Results (LGE Consolidated)

Balance Sheet
(Unit: KRW tn)

Financial Structure

Financial Ratio
(Unit : %)

4Q10 Assets Current Assets Cash Inventory Non-Current Assets Liabilities 32.32 16.51 1.94 5.87 15.80 19.46

1Q11 33.53 17.66 2.21 6.38 15.87 20.80 16.30 4.51 12.73 7.72 5.51

2Q11 33.84 17.53 2.24 6.09 16.31 Total Liability to Equity

4Q10

1Q11
163

2Q11
166

151

61 56

61

21.10 16.67 4.43 12.74 7.76 5.52

Debt to Equity

15.39 Current Liabilities Non-Current Liabilities 4.07 Equity Debt Net Debt 12.86 7.19 5.25

Net Debt to Equity

43 41

43

8 5

Performance and Outlook

III. Performance and Outlook by Sector

Sales/Profit

Consolidated Sales and Profit by Division

(Unit : KRW bn)

1Q11 Home Entertainment Mobile Communications Handset Home Appliance Air Conditioning & Energy Solution Sales Op. Income Sales Op. Income Sales Op. Income Sales Op. Income Sales Op. Income 5,280 82 2,909 -101 2,852 -101 2,699 103 1,452 39

QoQ 2.7%

2Q11 5,420 90

YoY 5.4%

2Q10 5,727 -26

11.6%

3,246 -54

4.6%

3,403 -119

12.2%

3,200 -55

5.1%

3,373 -120

6.9%

2,885 51

6.0%

2,722 185

29.2%

1,876 44

15.3%

1,628 59

* Divisional sales includes internal transactions between divisions

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III. Performance and Outlook by Sector

2Q11 Performance
Business Performance
(KRW tn)

Home Entertainment

Sales : Revenue improved QoQ due to increase in premium product sales and growth in developing markets
LCD TV : Sales increased QoQ due to strong Cinema 3D and LED TV sales

Op. Margin

1.5%

1.6%

1.7%

PDP TV : Sales grew QoQ especially in N. America and Asia Monitor : Sales decreased QoQ as a result of market decline

0.5%

1.0%

Profitability : Improved QoQ due to better product mix and cost reduction

Sales

3Q11 Outlook
5.73 5.77 6.65 5.28 5.42

Market : Despite weak demand in the developed markets, expect growth due to rising penetration of flat panel TVs in the developing countries and stronger sales in new feature products such as 3D / Smart TVs LGE : Plan to increase sales and secure profitability by expanding sales of high-end models such as Cinema 3D / Smart TV

2Q'10

3Q'10

4Q'10

1Q'11

2Q'11

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III. Performance and Outlook by Sector

2Q11 Performance
Business Performance
(KRW tn)

Mobile Communications

Sales : Shipments slightly grew QoQ to 24.8M while revenue was up 11% QoQ to KRW 3.2 trillion due to increased smartphone portion
Smartphone sales increased while there was a relative decline for feature phones - N. America : Growth in Optimus One/ 2X sales - Europe : Increased sales for smartphones (Optimus 2X / Black) while featurephone sales were weak - Emerging markets : Operated a profitability focused business

3.5% 7.7%
Op. Margin

3.5%

1.7%

10.0%
Sales

Profitability : Profitability improved due to rising smartphone sales and efforts to cut down fixed costs

3Q11 Outlook
3.4 3.02 3.38 2.91 3.25

Market : Competition is expected to intensify with handset makers launching new models with the opening of the 3D phone market and 4G LTE expanding in the developed countries

2Q'10

3Q'10

4Q'10

1Q'11

2Q'11

LGE : Increase sales by timely introducing new models with hardware competency and gain profitability by improving product mix

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III. Performance and Outlook by Sector

2Q11 Performance
Business Performance
(KRW tn)

Home Appliance

Sales : Increased 6% YoY to KRW 2.9 trillion due to rising sales in the developing markets (14% YoY growth based on USD)
Korea : Maintained sales growth by increasing sales of premium products (850 liter large size refrigerator, 6 motion washing machine, TROMM Styler) Overseas : Grew 15% YoY based on USD due to strong emerging market sales
1.8%

6.8% 3.8%
Op. Margin

2.4%

2.8%

(India 19%, CIS 59%, MEA 19%, CS America 23%)

Sales

Profitability : Declined due to raw material cost increase, appreciating KRW, and increased competition

3Q11 Outlook
2.72 2.75 2.82 2.7 2.88

Market : Despite the slow economy in the US and Europe, the appliance market is expected to increase 7% YoY due to strong growth in the developing markets LGE
Sales : Dominate premium image by continuously launching new products and increasing sales of larger, more energy efficient, and smart products

2Q'10

3Q'10

4Q'10

1Q'11

2Q'11

Profitability : Plan to secure profitability by increasing revenue and cutting costs despite challenges such as raw material price increase and FX rate

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III. Performance and Outlook by Sector Air-Conditioning & Energy Solution

2Q11 Performance
Business Performance
(KRW tn)

Sales : Increased 15% YoY due to strong growth in Korea and the emerging markets such as CIS
Korea : Posted 55% growth YoY driven by launching products with superior functions and quality

3.6%

1.1%

2.7%

2.3%

Overseas : Up 12% YoY with strong Multi V and Inverter product sales

Op, Margin

4.7%

Sales

Profitability : Despite revenue growth from the improvement of product mix with new model launches, profitability declined QoQ and YoY due to rising raw material costs and unfavorable FX movements

3Q11 Outlook
1.63 1.11 0.91 1.88 1.45

Market : Although the market is entering into the slow season, demand is expected to increase YoY in Korea, CIS, and MEA
1Q'11 2Q'11

2Q'10

3Q'10

4Q'10

LGE : Plan to increase global market share by maximizing sales in the Korean market and utilize our competitive advantage for strategic products such as Multi V and Inverter products 14 10

http://www.lg.com
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Appendix. 2011 Business Reorganization

- Realigned to 4 business units (vs. previous 5 units) and renamed Regional Headquarters to Regional Representatives - BS Company has been dissolved with the Monitor and Commercial Display & Security business units transferring to HE Company while the rest became independent business units - AC Company took on a new name of Air-Conditioning and Energy Solution (AE) Company - Changes in effect as of December 1, 2010 - Monitor (to HE)
- Digital Storage (DS) (to Independent Business Unit) - PC (to Independent Business Unit) - Commercial Display & Security (to HE) - Car (to Independent Business Unit)

Home Entertainment

Mobile Communications

Home Appliance

Air Conditioning

Business Solution

Home Entertainment
- LCD/ CRT TV - PDP TV/ Module - Media - CEM (previously RMC)** - Monitor (from BS) - Commercial Display & Security (from BS)

Mobile Communications
- Handset - Network

Home Appliance
- Refrigerator - Washing machine - Cooking & Cleaning - Compressor & Motor - Healthcare - Water Treatment

Air-Conditioning & Energy Solution

- Residential Air-Con. - Commercial Air-Con. - Air-Con. Compressor - Solar cell - LED lighting

Independent Business Unit

- DS (from HE) - PC (from MC) - Car (from BS)

* Independent business units report directly to the CEO ** CEM= Chemical & Electronic Material / RMC= Recording Media & Chemitronics

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Appendix

Summarized Financial Statements (LGE Parent Only) *

Income Statement
(Unit : KRW bn)
1Q 7,227 100.0% 1,606 22.2% 5,621 77.8% 5,838 80.8% 1,389 19.2% 1,244 17.2% 52 0.7% 93 1.3% 143 2.0% 236 3.3% 7 0.1% 229 3.2% 2Q 7,653 100.0% 1,802 23.5% 5,851 76.5% 6,441 84.2% 1,212 15.8% 1,443 18.9% (19) -0.2% (213) -2.8% (182) -2.4% (395) -5.2% (144) -1.9% (251) -3.3% 2010 3Q 7,229 100.0% 1,783 24.7% 5,446 75.3% 6,244 86.4% 985 13.6% 1,443 20.0% (66) -0.9% (393) -5.4% 85 1.2% (308) -4.3% (121) -1.7% (187) -2.6% 4Q 7,129 98.6% 1,701 23.5% 5,428 75.1% 6,370 88.1% 759 10.5% 1,338 18.5% 14 0.2% (593) -8.2% (18) -0.2% (611) -8.4% (184) -2.5% (427) -5.9% Total 29,239 100.0% 6,892 23.6% 22,346 76.4% 24,894 85.1% 4,345 14.9% 5,468 18.7% (19) -0.1% (1,105) -3.8% 28 0.1% (1,077) -3.7% (441) -1.5% (636) -2.2% 2011 1Q 2Q 6,933 100.0% 7,574 100.0% 1,953 28.2% 2,151 28.4% 4,980 71.8% 5,423 71.6% 5,716 82.4% 6,266 82.7% 1,217 17.6% 1,308 17.3% 1,300 18.8% 1,410 18.6% (34) -0.5% (16) -0.2% (49) -0.7% (87) -1.1% 65 0.9% 14 0.2% 16 0.2% (73) -1.0% 1 0.0% (37) -0.5% 15 0.2% (36) -0.5%

Sales Domestic Export Cost of goods sold Gross profit Selling & admin expense Other operating gain (Loss) Operating income (Loss) Financial income (Expense) Net profit (Loss) before tax Tax Net profit (Loss)

* Since this is not an audited nor reviewed report, content may be changed in the future if an auditor has a concern.

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Appendix

Summarized Financial Statements (LGE Parent Only) *

Balance Sheet
2010 Assets Current Assets Cash and cash equivalents Accounts receivable Inventory Other Non-current Assets Investment PP&E Intangible assets Other Liabilities Accounts payable Debt Other Equity 1Q 23,428 9,021 715 6,070 1,049 1,187 14,407 7,897 4,594 696 1,220 12,595 4,888 3,919 3,787 10,833 2Q 24,230 9,742 716 6,983 1,184 859 14,488 7,909 4,559 722 1,298 13,647 4,925 4,957 3,765 10,583 3Q 24,021 9,294 561 6,637 1,172 924 14,727 7,919 4,654 737 1,417 13,684 4,235 5,726 3,723 10,337 4Q 22,975 8,094 869 5,488 1,065 673 14,881 7,845 4,661 726 1,649 13,049 4,285 5,000 3,764 9,926

(Unit : KRW bn)

2011 1Q 23,970 8,990 903 6,074 1,259 754 14,980 7,845 4,732 728 1,676 14,064 4,564 5,665 3,834 9,906 2Q 24,143 8,824 860 6,017 1,151 796 15,319 7,870 4,839 830 1,780 14,278 4,271 5,919 4,088 9,864

* Since this is not an audited nor reviewed report, content may be changed in the future if an auditor has a concern.

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Appendix

Summarized Financial Statements (LGE Consolidated)

Income Statement
2010 1Q Sales Cost of goods sold Gross profit Selling & admin expense Other operating gain (Loss) Operating income (Loss) Financial income (Expense) Investment income (Loss) Net income before tax Tax Profit (Loss) from discontinued operations Net income Controlled shares Noncontrolled shares 13,217 9,807 3,411 2,895 35 481 59 219 759 117 32 675 650 24 100.0% 74.2% 25.8% 21.9% 0.3% 3.6% 0.4% 1.7% 5.7% 0.9% 0.2% 5.1% 2Q 14,410 11,110 3,300 3,185 (11) 126 (270) 210 66 25 815 856 842 14 100.0% 77.1% 22.9% 22.1% -0.1% 0.9% -1.9% 1.5% 0.5% 0.2% 5.7% 5.9% 3Q 13,429 10,555 2,874 3,187 (128) (185) 45 123 (17) (24) 0 8 (6) 14 100.0% 78.6% 21.4% 23.7% -1.0% -1.4% 0.3% 0.9% -0.1% -0.2% 0.0% 0.1% 4Q 14,698 11,982 2,716 2,946 16 (246) (54) (74) (374) (117) 0 (256) (260) 3 100.0% 81.5% 18.5% 20.0% 0.1% -1.7% -0.4% -0.5% -2.5% -0.8% 0.0% -1.7% Total 55,754 43,453 12,301 12,213 (88) 176 (219) 477 435 0 848 1,282 1,227 55 100.0% 77.9% 22.1% 21.9% -0.2% 0.3% -0.4% 0.9% 0.8% 0.0% 1.5% 2.3% 1Q 13,160 10,195 2,965 2,896 (61) 131 (37) (55) 38 54 0 (16) (30) 14

(Unit : KRW bn)

2011 2Q 100.0% 77.5% 22.5% 22.0% -0.5% 1.0% -0.3% -0.4% 0.3% 0.4% 0.0% -0.1% 14,385 11,078 3,307 3,193 (44) 158 (38) 29 150 41 0 108 98 11 100.0% 77.0% 23.0% 22.2% -0.3% 1.1% -0.3% 0.2% 1.0% 0.3% 0.0% 0.8%

* Since this is not an audited nor reviewed report, content may be changed in the future if an auditor has a concern. * Profit from LG Innotek being excluded from the consolidation of LGE has been indicated as Profit (Loss) from discontinued operations

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Appendix

Summarized Financial Statements (LGE Consolidated)

Balance Sheet
(Unit : KRW bn)
2010 1Q Assets Current Assets Cash and cash equivalents Accounts receivable Inventory Other Non-current Assets Investment PP&E Intangible assets Other Liabilities Accounts payable Debt Other Equity 33,794 18,409 1,977 8,042 6,011 2,379 15,386 4,512 7,736 820 2,318 21,139 6,728 6,907 7,505 12,655 2Q 34,036 18,635 1,684 8,629 6,379 1,943 15,401 6,063 6,256 758 2,323 20,774 6,707 7,083 6,984 13,261 3Q 33,822 18,195 1,785 7,477 7,025 1,908 15,627 6,158 6,326 773 2,371 20,738 6,174 7,723 6,842 13,084 4Q 32,318 16,515 1,944 7,002 5,872 1,696 15,804 6,008 6,500 763 2,532 19,459 5,824 7,193 6,442 12,860 2011 1Q 33,534 17,660 2,212 7,376 6,376 1,697 15,874 5,868 6,645 766 2,594 20,802 6,367 7,721 6,714 12,732 2Q 33,845 17,534 2,243 7,512 6,091 1,688 16,310 5,889 6,810 881 2,731 21,101 6,320 7,764 7,017 12,744

* Since this is not an audited nor reviewed report, content may be changed in the future if an auditor has a concern. * 1Q10 numbers are based on a consolidated basis including LG Innotek

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Appendix

Divisional Sales (LGE Consolidated)

(Unit : KRW bn)
1Q'10 2Q'10 3Q'10 4Q'10 '10 Total 1Q'11 2Q'11 QoQ YoY

Home Entertainment

Sales Op. Income (%) Sales Op. Income (%) Sales Op. Income (%)

Mobile Communications Handset

Home Appliance

Sales Op. Income (%) Sales Op. Income (%)

Air Conditioning & Energy Solution

5,548 150 2.7% 3,172 29 0.9% 3,140 28 0.9% 2,381 207 8.7% 1,172 43 3.7% 944 53 13,217 481 3.6%

5,727 -26 -0.5% 3,403 -119 -3.5% 3,373 -120 -3.5% 2,722 185 6.8% 1,628 59 3.6% 929 27 14,410 126 0.9%

5,772 86 1.5% 3,020 -303 -10.0% 2,971 -304 -10.2% 2,750 67 2.4% 1,107 -52 -4.7% 780 17 13,429 -185 -1.4%

6,648 -65 -1.0% 3,381 -261 -7.7% 3,328 -262 -7.9% 2,819 78 2.8% 913 10 1.1% 937 -8 14,698 -246 -1.7%

23,695 145 0.6% 12,975 -654 -5.0% 12,811 -658 -5.1% 10,673 538 5.0% 4,820 60 1.2% 3,591 88 55,754 176 0.3%

5,280 82 1.6% 2,909 -101 -3.5% 2,852 -101 -3.5% 2,699 103 3.8% 1,452 39 2.7% 821 7 13,160 131 1.0%

5,420 90 1.7% 3,246 -54 -1.7% 3,200 -55 -1.7% 2,885 51 1.8% 1,876 44 2.3% 958 27 14,385 158 1.1%

3%

-5%

12%

-5%

12%

-5%

7%

6%

29%

15%

Others

Sales Op. Income

17%

3%

Total

Sales Op. Income (%)

9%

0%

* Others include independent business unit earnings, other subsidiaries earnings, internal transactions, etc. * Since this is not an audited nor reviewed report, content may be changed in the future if an auditor has a concern.

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