Duty-Free Shops and Chinese Sales Keep LG Household & Health Care 'Sunny' This Year... Sales Expected to Reach 8 Trillion Won

Duty-Free Sales Surge... Demand Confirmed During China's 'Guanggunje'
Aggressive Marketing with New Brands like Su:m37, O Hui, CNP, etc.

[Asia Economy Reporter Minwoo Lee] LG Household & Health Care is expected to show clear performance growth this year as well. It is analyzed that total sales will reach 8.6 trillion won this year, based on domestic duty-free shops and local demand in China.

According to Shin Young Securities on the 11th, LG Household & Health Care's sales in the fourth quarter of last year are expected to be 1.9703 trillion won, and operating profit is expected to be 238.9 billion won. This represents an increase of 16.3% and 13.3%, respectively, compared to the same period last year. As a result, total sales last year are estimated to be 7.6425 trillion won, up 13.3% from the previous year, and operating profit is also expected to increase by 13% to 1.1741 trillion won.

The growth driver was cosmetics. In particular, duty-free shops and demand within China were effective. The cumulative sales growth rate of duty-free shops in dollar terms from October to November last year was 31.3% compared to the same period last year, and foreigner sales growth was 40.0%. This is why domestic duty-free shop cosmetics sales in the fourth quarter of last year could grow by 27% compared to the same period last year.

The overseas cosmetics sector is expected to grow 47.7% year-on-year, thanks to the successful performance of China's Singles' Day and the consolidation effect of the newly acquired U.S. cosmetics company New Avon. However, the operating profit margin is expected to fall by 0.3 percentage points to 12.1% due to the reflection of about 10 billion won in operating losses from the New Avon corporation.

The household goods business faced a difficult market environment, but after restructuring in 2018, the premiumization of products and overseas expansion strategies in 2019 are expected to result in a 1.3% increase in sales compared to the same period last year. However, domestic sales in the fourth quarter are expected to slightly decrease due to the withdrawal from Coupang and the sluggish digital channel. On the other hand, overseas household goods sales are predicted to increase by 5% year-on-year. The beverage business showed a stable trend with balanced growth in both carbonated and non-carbonated beverages.

LG Household & Health Care is expected to continue its growth trend this year, focusing on China and duty-free shops. Shin Suyeon, a researcher at Shin Young Securities, said, "Based on the brand Whoo, which is highly preferred by consumers in China, we will nurture second growth brands such as Su:m37, O Hui, and CNP." She added, "The Su:m37 brand confirmed demand in the local Chinese market through last year's Singles' Day performance, and expectations are growing for O Hui's rapid rise in the duty-free channel and CNP's growth in the duty-free channel based on solid recognition in derma cosmetics."

Shin Young Securities forecasted that LG Household & Health Care will achieve sales of 8.6303 trillion won and operating profit of 1.2205 trillion won this year, representing increases of 12.9% and 13.3%, respectively, compared to last year. Along with this, they gave a 'Buy' investment opinion and a target stock price of 1.6 million won. The closing price on the 10th was 1,344,300 won.

This content was produced with the assistance of AI translation services.