Ground breaking ceremony for LG Air Conditioning Joint Venture in Riyadh

Mr.H.Y.Nho, President of LG Air Conditioning Division said, "Saudi Arabia is the biggest market in the Middle East. And LG will build the complete local business system from product development to sales.

We plan to further strengthen our global network of Air Conditioning business by utilizing all the regional production facilities including the plant we will build in the country. With the construction of this new air conditioner production facility in Saudi Arabia, LG now has eight air conditioner production facilities in local markets around the world."

The joint venture will invest USD35 million (SAR131.3 million) in two phases within 5 years, and will start with the first stage/phase with about USD15 million (SAR56 million) with LG holding a 49% stake and H.G. Ibrahim Shaker Company 51%.

The new air conditioner production facility is being constructed in Al Tatweer Industrial City, south of 2nd Industrial City located in Riyadh, the capital city of Saudi Arabia. It is set to open in the fourth quarter of 2007.The plant is expected to have a production capacity of 250,000 units and it will reach 500,000 units in 5 years.

LG plans to utilize the new facility as a stronghold to move forward into the G.C.C. & neighbouring countries by developing localized products at competitive prices.

Moreover LG-Shaker factory shall fulfil Saudization ratio according to Saudi law and
utilize their facility to train Saudi youth to improve their employment opportunity.

The Saudi Arabian air conditioner market is growing at an average rate of 7% annually, The size of the market was USD 693 million last year, and is expected to be USD 748 million this year, The market size is further expected to grow to approximately USD 1010 million in 2011 said Mr. Nho.

H. G. Ibrahim Shaker Company. Ltd., Sole distributor of LG Air Conditioners, is the biggest partner for LG's business in Saudi Arabia and targeting to sell accumulatively US$ 1.4 billion by 2011 starting from the year 2007 onwards in domestic market.

Mr. Hussein Shaker, President of H. G. Ibrahim Shaker Company, highlighted the superb after-sales service and support that the company extends to its dealers and end users through 17 Shaker service centers, 250 highly qualified technicians and 100 mobile units, This is in addition to 10 authorized service centers. He praised LG for its dedication to bring the finest quality products to Saudi Arabia.

Last year LG's market share was 22% in the country. The company aims to account for 25% of the market in 2007 and 34% in 2011, solidifying its No. 1 position in Saudi Arabian market. According to the recent announcement from Fuji-Keizai, one of the famous market research companies in Japan, LG has recorded the total sales of more than 12 million units in 2006, taking about 19.5% of the world's air conditioner market shares. (2006 World Market 6,297milion units, source by JRAIA; Japan Refrigeration and Air conditioning Industry Association). It resulted in being No.1 position for seven consecutive years since the year 2000, having sold more than 10 million units in the global market for three consecutive years from the year 2004.

LG is currently operating air conditioner plants in Korea, China, Thailand, India, Turkey, Brazil, Vietnam and Iran (Technical Alliance).

With the eighth plant in Saudi Arabia added to the global network, LG Electronics plans to secure its market leadership in the Air Conditioning business.

Mr. Nho also announced that new models and features of LG Air Conditioners will be introduced in Saudi Arabia market during the year 2007. The new models will be equipped with more advanced and sophisticated features. He said, "We shall bring to our customers the advanced technology of "11-stage Neo Plasma plus filter" with the concept of Healthcare products, which ensures the best sterilization and decomposition of bacteria and thus will help the user to lead healthier and cleaner life. And, LG also plans to launch the latest & fully Tropicalized Multi V product of which control is a technically advanced and economical system with maximized cooling load and high efficiency. Multi V product was developed to focus on large buildings and high-rises. Its technology allows the installation of pipes up to 150m long, at an altitude of 50m. Multi V product offers lower installation fees and reduced operating costs. He also added that LG's Multi Power System, a world's first, combines multiple compressors in a single air conditioning system, and reduces energy consumption by a maximum of 70 percent compared to conventional one-compressor air conditioners. MPS also reduces noise and vibration by adopting multiple small-capacity compressors, which enables the system to run more quietly than air conditioners with one large compressor, even when both compressors are operating. Its optimized piping design and low noise fans also help minimize noise and vibration. He finally empathized that Commercial Air Conditioner products are another examples of LG's commitment to providing our customers with the most energy efficient air conditioners possible, These technologies are not only better for the environment, but also easier on our customers' pocketbooks. LG will double the size of its air conditioning R&D team by 2008, and increase R&D investment to 10 percent of total sales."