Delayed Recovery... AmorePacific 2Q Operating Profit Expected to Halve

Both Domestic and International Performance Sluggish... COVID-19 Recovery Trend Is Key

[Asia Economy Reporter Minwoo Lee] Amorepacific is expected to continue its poor performance in the second quarter. Both domestic and overseas markets seem to be experiencing slow recovery.

On the 20th, Korea Investment & Securities forecasted that Amorepacific would achieve sales of 1.117 trillion KRW and an operating profit of 61 billion KRW in the second quarter of this year. Compared to the same period last year, sales are expected to decrease by 20%, and operating profit by 50%. The situation is unfavorable both domestically and internationally. For domestic cosmetics, sales of 594 billion KRW and operating profit of 62 billion KRW are expected. This represents a 23% decrease in sales and an 18% decrease in operating profit compared to the second quarter of last year. Overseas cosmetics sales are estimated to drop by 17% to 424 billion KRW, with an operating loss of 17 billion KRW. Poor performance is inevitable both at home and abroad.

In China, the impact of the novel coronavirus disease (COVID-19) is gradually easing, showing signs of recovery. Local sales are expected to decrease by only 7%. Na Eun-chae, a researcher at Korea Investment & Securities, explained, "The rate of negative growth will significantly shrink compared to the first quarter," adding, "Sulwhasoo and online businesses are recording clear growth, while mass and offline channels are still under the influence of sluggishness."

On the other hand, duty-free store sales and overseas regions outside China are expected to worsen. Duty-free sales in the domestic business are forecasted to decline by 45% year-on-year. Domestic sales excluding duty-free are also expected to decrease by 4%, indicating negative growth. Researcher Na said, "Domestic online sales are growing rapidly by more than 50%, supported by strong direct overseas purchases, but offline channels such as department stores, Aritaum, and door-to-door sales are estimated to be in negative growth," and added, "Hong Kong is expected to experience significant negative growth in the second quarter, and Southeast Asia and the Americas businesses are inevitably facing negative growth due to the impact of COVID-19."

Future easing of entry restrictions and the containment of COVID-19 are seen as key factors. Researcher Na stated, "This year, the company experienced significant downturns mainly in duty-free stores, and considering the special situation of COVID-19, the poor performance this year is largely due to external factors," and explained, "The strategy focusing on luxury and online sectors and expanding global business is positive as it aims to enhance brand power while alleviating fixed cost burdens."

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