Amore Pacific Corp Introduction 2010

IR Presentation

As a note, it is suggested to use this material only as a reference, as it contains information and data that are subject to changes without prior notice due to uncertainties, changes in the organizational structure, redefinition of accounting policies, etc., and may cause the actual results to differ from those stated or implied in this material. AMOREPACIFIC Corp. is a newly created company after the corporate restructuring in June 2006, and as AMOREPACIFIC Corp. continues the core business of the pre-demerger company, the information in this material is based on such operations, assuming no demerger for ease of comparison with the past data.

[1]

▌ ▌

Vision History

Table of Contents

Company Overview

Business Overview ▌

▌ ▌ ▌ ▌

Sustaining Growth Enhancing Profitability Sale Breakdown Leading the Domestic Market Overseas Business

Appendices ▌ ▌ ▌

Financial Summary Corporate Governance AMOREPACIFIC in Global Market

[2]

Company Overview

Global total-care provider of Beauty & Health

Vision by 2015

“Asian Beauty Creator”

Aiming For 2015 Beauty

Health

‘Outer’ Beauty 10 Mega-brands KRW 4 tn

‘Inner’ Beauty 5 Mega-brands KRW 1 tn

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

[3]

Company Overview

Sales of KRW 5tn ▶ Beauty  80% of total sales KRW 4tn

Overseas (KRW 1.2tn)

 ‘Outer Beauty’  Global Top 10  10 mega-brands

 AMOREPACIFIC, Etude, AMOS Professional, etc.  30% sales contribution from overseas

Become the „Asian Beauty Creator‟  Accelerate expansion in China  Strengthen brand portfolio while developing new markets

Overseas

Customers ▶ Health KRW 1tn

 20% of total sales  ‘Inner Beauty’  Lifetime Health  5 mega-brands  AMOREPACIFIC, Pacific Pharmaceuticals, etc.

 Develop niche markets through customer segmentation  Launch new products through intensified R&D and marketing activities

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

Vision by 2015

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.

 Expand Beauty & Health related businesses  Develop strategic joint ventures

New Business Distribution  Proactively respond to changes in the distribution network  Sustain market visibility

[4]

Company Overview

1945 Early Years

1968 Growth Stage

1991 Innovation Stage

1997 Entering the Global Arena

1945 Founded

1971 Initiated

1991 Refocus on

2002 Launched

1954 Korea’s first

1973 Company goes

1992 Declared

2004 Announced

1990 Opened office

1993 Declared Total

2006 Holding

cosmetics R&D center

1964 Adopted doorto-door sales method

Korea’s first makeup campaign public

in Paris, France

Beauty & Health business

Management Philosophy Commitment initiatives

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

History

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.

Laneige in Hong Kong

Global Vision 2015 company restructuring

[5]

Business Overview

Domestic Sales Trend (KRW bn)

Overseas Sales Trend (KRW bn)

15.5%

43.2%

12.8% 22.3%

6.6%

5.5%

1,531 1,357 1,273 1,167

34.0%

1,769

9.1%

11.6%

295

234 9

249

250

157 1,474 109

1,270

1,023

911

9

1,108

2006

Cosmetics

9 63

2007 MC&S

2008

283 12 97

175 8

96

78 174

47 53

2005

20.9%

262

256

Sustaining Growth

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.

85

89

2006

2007

129

2009 Growth Rate (%)

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

2005 Asia

France

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

USA

2008

2009 Growth Rate (%) [6]

Business Overview

Domestic Profitability Trend

69.4%

69.0%

70.3%

69.6%

71.3%

Overseas Net Profits Trend (KRW bn) 2005

2006

2007

2008

-2

-2

5

-5

-6

18.1%

18.3%

16.7%

17.0%

-7 -9

-3 -4

-4 -2

-4 -4

-9 18.7%

2009

Enhancing Profitability

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.

-20

-14

-16

-18 -4 -26 2005

2006 OP Margin

2007

2008 GP Margin

2009 Asia

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

France

US

[7]

Business Overview ▶ Cosmetics

▶ Personal Care & Green Tea

 Outstanding R&D, creative marketing and customer service

 Focus on hair, body, oral and green tea products

 Strong brand cultivation and regional expansion

83%

2009 Sales

 Simple and concentrated branding efforts

17%

 Solidifying competitiveness in the Asian market

 Developing Korean tea culture

Sales Breakdown

Domestic Sales Breakdown

Sales Breakdown by channel 22%

20%

18%

17%

17%

7%

6%

6%

6%

5%

3%

3%

5%

5%

6%

9%

9%

11%

12%

14%

14%

15%

16%

16%

17%

17%

17%

37%

38%

37%

35%

32%

2005

2006

2007

2008

2009

3%

4%

5%

      

Personal Care & Green Tea Others* Internet & Home shopping Discount store Specialty store Department store Door-to-door

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

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

[8]

Business Overview

Domestic Market Size and AP’s Market Share

Premium* Total

Mass**

43.4%

32.7% 17.2%

45.6%

35.2% 19.6%

44.2%

34.3% 20.2%

43.0%

34.3% 21.7%

42.2% 35.1% 24.8% (KRW TN, Retail Value)

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

Leading the Domestic Market

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.

7.4 5.2

5.4

2005

2006

5.9

2007

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

6.6

2008

2009 [9]

Business Overview

Sales by Region

“MARKETING” ▶ France

'09

12

'08

9

'09

97

'08

96

 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 United States  Enhance brand awareness  AMOREPACIFIC, with 30 locations across the United States

'09

174

'08

129

(In KRW bn)

Overseas Business

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.

“GROWTH” ▶ Asia  The main focus of AMOREPACIFIC’s overseas expansion

 Introduction of domestic brands into the department stores  Laneige, with more than 400 counters across Asia

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

[10]

APPENDIX

2008

(KRW bn)

2009 %

1,531.3

Sales

%

100.0 1,769.0

100.0

Balance Sheet (KRW bn)

2008.12

2009. 12

1,455.2

1,664.0

445.1

550.3

1,010.0

1,113.8

339.9

364.3

Current Liability

199.4

217.2

Non-current Liability

140.4

147.1

1,115.3

1,299.7

34.5

34.5

712.7

712.7

-1.4

-1.8

30.9

24.4

338.6

529.9

Asset Current Asset

1,066.3

Gross Profit

69.6 1,261.1

71.3

Non-current Asset

Liability 811.1

SG&A Expense

255.2

Operating Profit Non-operating Profit

53.0 16.7

35.2

960.5

300.6

54.3 17.0

Shareholder’s Equity

33.3

Capital Non-operating Expense

Income Before Taxes

46.1

244.3

34.6

16.0

299.3

Capital Reserve 16.9

Capital Adjustment Accumulated Other

Net Profit

170.2

11.1

225.9

12.8

Inclusive Gain and Loss Retained Earnings

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

Financial Summary

Income Statement

[11]

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]