amore pacific corp introduction 2010

IR Presentation

[1]

As a note, it is suggested to use this material only as a reference, as itcontains information and data that are subject to changes without priornotice due to uncertainties, changes in the organizational structure,redefinition of accounting policies, etc., and may cause the actual resultsto differ from those stated or implied in this material.

AMOREPACIFIC Corp. is a newly created company after the corporaterestructuring in June 2006, and as AMOREPACIFIC Corp. continues thecore business of the pre-demerger company, the information in thismaterial is based on such operations, assuming no demerger for ease ofcomparison with the past data.

[2]

Table

of C

onte

nts

Company Overview▌ Vision

▌ History

Business Overview▌ Sustaining Growth

▌ Enhancing Profitability

▌ Sale Breakdown

▌ Leading the Domestic Market

▌ Overseas Business

Appendices▌ Financial Summary

▌ Corporate Governance

▌ AMOREPACIFIC in Global Market

[3]

“Asian Beauty Creator”

Beauty Health

‘Outer’ Beauty10 Mega-brands

KRW 4 tn

‘Inner’ Beauty5 Mega-brands

KRW 1 tn

ⓒ AMOREPACIFIC 2010. Proprietary and Confidential. All Rights Reserved.

Vis

ion b

y 2

015

Company Overview

Aiming For 2015

Global total-care provider

of Beauty & Health

Vis

ion b

y 2

015

The companies under PACIFIC group share the same vision of becoming the ‘Asian Beauty Creator,’ a global player that creates new standards for Asian beauty, both inner and outer, and promotes Asian beauty to the global

audience. To achieve this vision, AMOREPACIFIC is putting efforts into nurturing a strong portfolio of mega-brands in the area of beauty and health, simultaneously strengthening its presence in the overseas market.

Sales of KRW 5tn Become the „Asian Beauty Creator‟

80% of total sales

‘Outer Beauty’

Global Top 10

10 mega-brands

AMOREPACIFIC, Etude, AMOS Professional, etc.

30% sales contribution from overseas

20% of total sales

‘Inner Beauty’

Lifetime Health

5 mega-brands

AMOREPACIFIC, Pacific Pharmaceuticals, etc.

▶ Beauty

▶ Health

KRW 4tn

KRW 1tn

Accelerate expansion in China

Strengthen brand portfolio while developing new markets

Expand Beauty & Health related businesses

Develop strategic joint ventures

Develop niche markets through customer segmentation

Launch new products through intensified R&D and marketing activities

Proactively respond to changes in the distribution network

Sustain market visibility

NewBusiness

CustomersDistribution

OverseasOverseas

(KRW 1.2tn)

Company Overview

[4]ⓒ AMOREPACIFIC 2010. Proprietary and Confidential. All Rights Reserved.

[5]

Company Overview His

tory

For more than 60 years, AMOREPACIFIC has been devoted to the business of Beauty and Health, consistently striving to be the best with focus on technology, quality and customers. AMOREPACIFIC has maintained its

position as Korea’s leader in the field of cosmetics and is now looking beyond into becoming the ‘Asian Beauty Creator,’ a major global player that redefines and promotes the Asian beauty to customers all over the globe.

1945Early Years

1991Innovation Stage

1997Entering the Global Arena

1945 Founded

1954 Korea’s first cosmetics R&D center

1964 Adopted door-to-door sales method

1971 Initiated Korea’s first makeup campaign

1973 Company goes public

1990 Opened office in Paris, France

1991 Refocus on Beauty & Health business

1992 Declared Management Philosophy

1993 Declared Total Commitment initiatives

2002 Launched Laneige in Hong Kong

2004 Announced Global Vision 2015

2006 Holding company restructuring

1968Growth Stage


Susta

inin

g G

row

th

Since 2000, AMOREPACIFIC has generated sustainable sales in both the domestic and overseas markets. In the upcoming years, the company is expected achieve 10% sales growth in the domestic market while expanding into

the overseas market with more than 20% sales growth annually.

911 1,023

1,108

1,270

1,474 256

250

249

262

295

1,167

1,273

1,357

1,531

1,769

5.5%

9.1%

6.6%

12.8%

15.5%

2005 2006 2007 2008 2009

Cosmetics MC&S Growth Rate (%)

Domestic Sales Trend (KRW bn) Overseas Sales Trend (KRW bn)

53 85 89

129

174 47

63 78

96

97

9

9 8

9

12

109

157 175

234

283

22.3%

43.2%

11.6%

34.0%

20.9%

2005 2006 2007 2008 2009

Asia France USA Growth Rate (%)

Business Overview

[6]ⓒ AMOREPACIFIC 2010. Proprietary and Confidential. All Rights Reserved.

* MC&S (Mass Cosmetics and Sulloc): Personal Care and Green Tea Business

[7]

Enhancin

g P

rofita

bility

Gradual margin enhancement is expected for the domestic business through better product mix and distribution efficiencies, added with TCR efforts throughout all divisions. As for the overseas, profitability is still in the red due to the Company’s expansion efforts, but is gradually enhancing as the Company expects to break even after 2010.

18.7% 18.1% 18.3%16.7% 17.0%

69.4% 69.0%70.3%

69.6%

71.3%

2005 2006 2007 2008 2009

OP Margin GP Margin

Domestic Profitability Trend Overseas Net Profits Trend (KRW bn)

-6 -5

-2 -2

-9

-7

-9

-20

-4

-2

-4

-4

-4

-4

-18

-16

-14

-3

2005 2006 2007 2008 2009

Asia France US

-26

5

Business Overview


[8]

37% 38% 37% 35% 32%

16% 16% 17% 17% 17%

11% 12% 14% 14% 15%

5% 5% 6% 9% 9%3%3%

3% 4% 5%7% 6% 6% 6% 5%

22% 20% 18% 17% 17%

Personal Care & Green Tea

Others*

Internet & Home shopping

Discount store

Specialty store

Department store

Door-to-door

Sale

s B

reakdow

n

Domestic Sales Breakdown

83%17%

▶ Cosmetics ▶ Personal Care & Green Tea

Outstanding R&D, creative marketing and customer service

Strong brand cultivation and regional expansion

Solidifying competitiveness in the Asian market

Focus on hair, body, oral and green tea products

Simple and concentrated branding efforts

Developing Korean tea culture

2009Sales

Sales Breakdown by channel

2005 2006 2007 2008 2009

* Other sales include direct sales, export sales and other minor sales

Business Overview


17.2% 19.6% 20.2%21.7% 24.8%

32.7% 35.2% 34.3% 34.3%35.1%

43.4%45.6%

44.2% 43.0%42.2%

Premium*

Total

Mass**

* Premium Channels include Department stores and Door to Door** Mass Channels include Specialty stores and Discount stores

AMOREPACIFIC has been outperforming the cosmetics market, strengthening its competency in the field of Beauty and Health. The Company is adding efforts to build stronger brands by appropriately responding to market

changes and needs, and is also taking the initiatives to adopt a more balanced channel portfolio.

5.2 5.4 5.9

6.6

7.4

2005 2006 2007 2008 2009

(KRW TN, Retail Value)

[9]

Leadin

g th

e D

om

estic

Mark

et

Business Overview

Domestic Market Size and AP’s Market Share


[10]

Business Overview Overs

eas B

usin

ess

As the world is consolidating into a ‘one-big-market,’ AMOREPACIFIC is accelerating its globalization efforts to construct a strong foothold in the world market. AMOREPACIFIC’s overseas operations are employing local

professionals with vast experience and knowledge on each region’s market and customers for successful launches and expansion.

▶ The United States▶ Asia

9

12

'08

'09

129 '08

'09

96

97

'08

'09

Enhance brand awareness

AMOREPACIFIC, with 30 locations across the United States

First introduction in 1997, nurtured ‘lolita Lempicka’ to become one of the top 5 fragrances in France

Lolita Lempicka expanding globally introducing its second line in 2006 and third line in 2009

The main focus of AMOREPACIFIC’s overseas expansion

Introduction of domestic brands into the department stores

Laneige, with more than 400 counters across Asia

“MARKETING”

▶ France

“GROWTH”

Sales by Region (In KRW bn)


174

[11]

Sales 1,531.3 100.0 1,769.0 100.0

Gross Profit 1,066.3 69.6 1,261.1 71.3

SG&A Expense 811.1 53.0 960.5 54.3

Operating Profit 255.2 16.7 300.6 17.0

Non-operating Profit 35.2 33.3

Non-operating Expense 46.1 34.6

Income Before Taxes 244.3 16.0 299.3 16.9

Net Profit 170.2 11.1 225.9 12.8

Income Statement Balance Sheet

(KRW bn)2008 2009

% %(KRW bn) 2008.12 2009. 12

Asset 1,455.2 1,664.0

Current Asset 445.1 550.3

Non-current Asset 1,010.0 1,113.8

Liability 339.9 364.3

Current Liability 199.4 217.2

Non-current Liability 140.4 147.1

Shareholder’s Equity 1,115.3 1,299.7

Capital 34.5 34.5

Capital Reserve 712.7 712.7

Capital Adjustment -1.4 -1.8

Accumulated Other

Inclusive Gain and Loss30.9 24.4

Retained Earnings 338.6 529.9

APPENDIX Fin

ancia

l Sum

mary


www.amorepacific.co.kr

Headquarters: Amorepacific Bldg., 181, Hangangro 2 Ga, Yongsan Gu, Seoul, Korea 140-777

TEL: 82-2-709-5103 / FAX: 82-2-709-5339 / Email: [email protected]

amore pacific corp introduction 2010

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