LG Household & Health Care, Stable Performance Expected to Continue in Q3

[Asia Economy Reporter Song Hwajeong] LG Household & Health Care is expected to maintain stable performance in the third quarter despite the impact of the novel coronavirus disease (COVID-19).

According to Hanwha Investment & Securities on the 12th, LG Household & Health Care's sales and operating profit for the third quarter are estimated at 1.9227 trillion KRW and 312.4 billion KRW, respectively. Sales are expected to decrease by 2.1% compared to the same period last year, but operating profit is projected to increase by 0.2%. Son Hyoju, a researcher at Hanwha Investment & Securities, said, "This year's performance is likely to be inevitably affected by the impact of COVID-19 on the duty-free business, but relatively stable results will be recorded due to steady growth in the household goods and beverage businesses."

Sales in the cosmetics sector for the third quarter are estimated at 1.0196 trillion KRW, down 12.2% year-on-year, and operating profit is expected to decrease by 15.9% to 178.1 billion KRW. Researcher Son explained, "The decline rate in duty-free business sales is 35%, still sluggish due to COVID-19, but it is expected to improve compared to the previous quarter (-45%). In the previous quarter, the duty-free business saw relatively weakened sales due to expanded discounts on global brands, but this quarter, with the normalization of small parcel shipments, the decline in duty-free sales will narrow compared to the previous quarter." Local sales in China are expected to grow by 20%, driven by steady demand centered on the 'Whoo' brand.

Household goods are projected to record sales of 495 billion KRW, up 23.4%, and operating profit of 68.8 billion KRW, up 52.6%, showing steady performance growth following the previous quarter due to growth in high-profit digital channels and personal care. Beverages are also estimated to have sales of 408.1 billion KRW, up 1.3%, and operating profit of 65.5 billion KRW, up 19.2%. Researcher Son analyzed, "Although sales growth rate is sluggish due to the prolonged rainy season and typhoon impact during the peak season, delivery and carbonated drink demand remain steady, and profitability is expected to be stable due to reduced marketing activities."

Researcher Son said, "Although the core cosmetics business is inevitably impacted by the ongoing COVID-19 throughout this year, stable performance is being demonstrated thanks to a diversified and stable business portfolio. In uncertain external conditions, the attractiveness of LG Household & Health Care's relatively high profit stability based on its diversified business portfolio will be highlighted."

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