LOCK & LOCK 2Q12 Earnings Release July 30, 2012 Contents 1. 2Q12 Preliminary Earnings 2. Sales Breakdown by Region 3. Sales Breakdown by Channel 4. Sales Breakdown by Product Category 5. Summary Financials This document has been prepared by Lock & Lock, Co., Ltd. This document contains forward-looking statements, which are subject to risks, uncertainties, and assumptions. This document is being presented solely for your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented.
1. 2Q12 Preliminary Earnings In 2Q12, sales rose 9% YoY to W136.4bn and operating profit increased 28% YoY to W20bn. Korea domestic sales came in at W45.8bn (-2% YoY), while China registered W68.1bn (+30% YoY or +21% YoY based on RMB) in revenue. 2011 2011 2012 [Unit: Wmm] QoQ YoY 2Q 1Q 2Q Sales 125,284 124,127 136,430 % 100% 100% 100% 10% 9% COGS 67,886 63,100 72,468 % 54% 51% 53% 7% Gross Profit 57,398 61,027 63,962 % 46% 49% 47% Operating Profit 15,621 21,310 20,022 % 12% 17% Pretax income 15,082 22,434 20,725 % 12% 18% 5% 11% -6% 28% -8% 37% Net Profit 8,540 17,758 16,131 % 7% 14% 12% -9% 89% 3 1. 2Q12 Preliminary Earnings Sales & OP Highlights Total sales grew 9% YoY to W136.4bn - Korea domestic sales edged down 2% YoY to W45.8bn. Sales through TV shopping were particularly weak. - China sales continued a firm growth of 30% YoY to W68.1bn (21% YoY growth in RMB). Channel-wise, sales were driven by TV shopping and Internet; by product category, it was glass food containers, Living Box (household goods containers made of fabric), Hot&Cool (thermos) and Aqua (plastic water bottle). Operating expenses remained moderate but OPM didn t improve QoQ due to rising COGS. - COGS at Weihai factory #2 rose W2.1bn (1.5%p) as its utilization ratio fell by over due to the relocation of 15 plastic injection machines from Weihai factory #1. Other fixed cost at this factory increased on the addition of 5 new machines, depreciation cost and utility expense. - Glass factory in Vietnam added W900mn to COGS (0.7%p). This may continue to occur for the time being. - Tighter inventory control incurred W1bn of inventory-related cost (0.7%p) (low-margin sales of obsolete goods in the US, etc.). [Unit: Wmm] 2011 2012 2Q 2Q YoY [Unit: Wmm] 2011 2012 2Q 2Q YoY Payroll 9,802 11,597 18% Advertising 4,126 1,203-71% Transportation 3,310 5,064 53% Rent 3,586 4,346 21% Sales Commission 7,804 5,978-23% 11,240 14,243 27% Operating Expenses 39,868 42,431 6% Non-Operating profit 1,302 787-40% Gain on Foreign currency translations 0-557 #DIV/0! Gain Foreign currency transactions 1,036 449-57% 266 895 237% Non-Operating loss 3,212 2,297-28% Loss on Foreign currency translations 763 287-62% Loss Foreign currency transactions 1,933 656-66% 516 1,354 162% Non-Operating profit & loss -1,910-1,509-21% 4
2. Sales Breakdown by Region Region 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 China 40% 42% 38% 42% 45% 52% 50% Korea 30% 39% 37% 36% 30% 34% Asia 6% 6% 9% 11% 11% 11% 11% ROW 25% 21% 10% 9% 7% 5% 100% 80% 60% 25% 6% 21% 9% 6% 30% 39% 10% 9% 7% 5% 11% 11% 11% 11% 30% 34% 37% 36% 40% 40% 42% 38% 42% 45% 52% 50% 0% 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 China Korea Asia ROW 5 3. Sales Breakdown by Channel Korea 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 TV shopping 10% 18% 44% 37% 37% 28% 30% Hyper markets 42% 41% 26% 24% 25% 28% Special(B2B) 14% 14% 10% 13% 13% 16% 13% Wholesale 31% 26% 16% 14% 13% Internet 8% 7% 4% 6% 5% 6% 7% Brand shop 2% 2% 3% 5% 6% 8% 7% 100% 80% 60% 40% 0% 31% 14% 42% 10% 14% 41% 18% 4% 26% 10% 26% 44% 5% 6% 8% 7% 6% 5% 6% 7% 16% 14% 13% 13% 13% 24% 25% 37% 37% 16% 13% 28% 28% 30% 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 TV shopping Hyper markets Special(B2B) Wholesale Internet Brand shop 6
3. Sales Breakdown by Channel China Division 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 TV shopping 9% 9% 22% 23% 24% Special(B2B) 46% 41% 30% 26% 22% 23% Hyper markets 12% 17% 18% 16% 16% Wholesale 19% 19% 16% 16% 16% 14% Internet 7% 7% 13% 8% 12% 13% Brand shop 7% 7% 9% 10% 10% 9% 8% 100% 80% 60% 7% 7% 9% 10% 10% 9% 8% 7% 7% 13% 8% 12% 13% 19% 19% 16% 16% 16% 14% 12% 17% 18% 16% 16% 40% 46% 41% 30% 26% 22% 23% 0% 22% 23% 24% 9% 9% 2008 2009 2010 2Q 11 2011 1Q 12 2Q 12 TV shopping Special(B2B) Hyper markets Wholesale Internet Brand shop 7 3. Sales Breakdown by Channel Southeast Asia Division 2010 1Q 11 2Q 11 2011 1Q 12 2Q 12 Special(B2B) 30% 27% 41% 40% 33% Wholesale 12% 17% 22% Hyper markets 25% 22% 17% 18% 18% 19% Brand shop 22% 27% 26% 28% 24% TV shopping 2% 6% 1% 3% 4% 5% Internet 0% 0% 0% 0% 0% 1% 100% 80% 2% 6% 22% 1% 3% 4% 5% 27% 26% 28% 24% 60% 40% 25% 22% 17% 18% 18% 19% 12% 17% 22% 30% 27% 41% 40% 33% 0% 2010 1Q 11 2Q 11 2011 1Q 12 2Q 12 Special(B2B) Wholesale Hyper markets Brand shop TV shopping Internet 8
4. Sales Breakdown by Product Category Korea container sales came in at W18.9bn (+6% YoY), while the sales of outdoor and kitchen/living/cookware fell 7% YoY and 6% YoY to W14bn and W12.9bn, respectively. containers Bisfree (premium plastic) sales grew 78% YoY to W10.4bn on product 46,543 37,290 45,775 renewal and continued strong demand. 13,784 9,973 12,916 The sales of Bisfree Aqua (premium plastic water bottle) went up 44% YoY to W4bn. Consumer preference over BPA-free plastic seems to 15,010 8,585 14,007 be clearly growing. (kitchen/living/cookware, etc.) Living Box (household goods containers made of fabric) sales slid 17,749 18,732 18,852 42% YoY to W7.1bn, while inplus (household goods containers made of plastic) sales gained 12% YoY to W1.5bn. 2Q11 1Q12 2Q12 Excluding exports 9 4. Sales Breakdown by Product Category Korea [2011] [2Q12] COOKWARE 2% INPLUS 3% COOKWARE 1% INPLUS 3% LIVING BOX 22% ETC 4% LIVING BOX ETC 12% OUT DOOR 24% PLASTIC CONTAINER 31% OUT DOOR PLASTIC CONTAINER 33% CERAMIC 7% GLASS 5% CERAMIC 3% GLASS 4% Based on 2Q12 Korea domestic sales 10
4. Sales Breakdown by Product Category China container sales edged up to W24.1bn, while the sales of outdoor and kitchen/living/cookware were strong at 23% YoY and 78% YoY to W18.4bn and W25.6bn, respectively. 52,512 14,469 15,009 64,570 14,729 19,739 68,150 25,634 18,384 containers Glass container sales increased 32% YoY to W13.4bn on a diversified set offering across distribution channels. Hot&Cool (thermos) sales surged 117% YoY to W3.5bn on further penetration into hypermarkets. Sales remained strong across all distribution channels. Aqua (water bottle) sales were up 11% YoY to W14.3bn ahead of summer months. 23,034 30,102 24,132 (kitchen/living/cookware, etc.) Living Box (household goods containers made of fabric) sales grew 38% YoY to W11.5bn on brisk demand from TV shopping, Internet and hypermarkets. Cookplus (cookware) sales rose 44% YoY to W1.6bn on strong demand from corporate customers and brand shops. 2Q11 1Q12 2Q12 11 4. Sales Breakdown by Product Category China COOKWARE 3% [2011] [2Q12] COOKWARE 3% ETC 4% ETC 9% LIVINGBOX 16% PLASTIC CONTAINER 26% LIVINGBOX 19% PLASTIC CONTAINER 16% OUT DOOR 30% OUT DOOR 30% GLASS 22% GLASS 22% CERAMIC 1% CERAMIC 1% 12
4. Sales Breakdown by Product Category Southeast Asia container and outdoor sales grew 24% YoY to W3bn and 16% YoY to W2.5bn, while the sales of kitchen/living/cookware dropped YoY to W919mn. containers Classic (regular plastic) sales jumped 31% YoY to W2.2bn on rising shipments to corporate customers and hypermarkets. 5,889 6,381 829 6,417 919 Aqua (water bottle) sales were up 54% YoY to W1.3bn also on strong demand from corporate customers and hypermarkets. 1,303 2,143 2,443 2,840 2,712 2,480 3,018 2Q11 1Q12 2Q12 13 4. Sales Breakdown by Product Category Southeast Asia [2011] [2Q12] LIVING BOX 1% COOKWARE 4% ETC 16% LIVING BOX 1% COOKWARE 3% ETC OUT DOOR 31% PLASTIC CONTAINER 36% OUT DOOR 34% PLASTIC CONTAINER 39% CERAMIC 2% GLASS 10% GLASS 3% CERAMIC 0% 14
5. Summary Financials Balance Sheet Increase/ Descriptions 2Q 12 2011 Decrease Current Assets 455,866 438,641 17,225 Quick Assets 291,566 289,317 2,248 Inventories 134,240 127,246 6,995 Other Current Assets 30,060 22,078 7,982 Non-Current Assets 324,668 282,784 41,884 Investments 9,703 7,833 1,870 Property&Equipment 270,456 232,977 37,479 Intangible Assets 12,032 10,870 1,161 Deferred Tax Assets 7,602 6,762 840 Other Non-Current Assets 24,874 24,342 533 TOTAL ASSETS 780,533 721,425 59,109 Current Liabilities 160,127 123,176 36,951 Non-Current Liabilities 37,753 35,535 2,218 TOTAL LIABILITIES 197,880 158,711 39,169 Capital Stock 27,500 27,500 0 Additional Paid-in and Other Capital 314,683 314,683 0 Capital Adjustment -18,991-14,087-4,904 Accumulated Other Comprehensive Income 9,082 9,358-276 Earned Surplus 250,183 225,058 25,125 External Shareholder's Equity 197 201-5 TOTAL EQUITY 582,654 562,714 19,940 TOTAL LIABILITIES & EQUITY 780,533 721,425 59,109 15 5. Summary Financials Income Statement Descriptions 2Q 12 2011 Increase/ Decrease Sales 136,430 125,284 11,146 Cost of Goods Sold 72,468 67,886 4,582 Gross Profit 63,962 57,398 6,565 Selling and Administrative Expenses 42,431 39,867 2,564 Other Operating Profit and Loss -1,510-1,910 3,420 Operating Income 20,022 15,621 4,401 Financial Profit and Loss and the rest 703-539 1,242 Income and Loss Before Income Taxes 20,725 15,082 5,643 Income Tax Expenses 4,594 6,542-1,948 Net Income 16,131 8,540 7,591 16