LG Household & Health Care, 62 Consecutive Quarters of Profit Growth Amid COVID-19 Challenges

Q3 Operating Profit Grows 5.1%... Beauty Business Declines 6.7%

[Asia Economy Reporter Yujin Cho] LG Household & Health Care (CEO Cha Seok-yong) has once again achieved record-high performance despite the adverse effects of the novel coronavirus infection (COVID-19).

LG Household & Health Care announced on the 22nd that its consolidated operating profit for the third quarter of this year was preliminarily estimated at 327.6 billion KRW, a 5.1% increase compared to the same period last year. During the same period, sales grew 5.4% year-on-year to 2.0706 trillion KRW, and net profit increased by 6.7% to 231.7 billion KRW.

Operating profit has maintained growth for 62 consecutive quarters since the first quarter of 2005, except for a single contraction in the first quarter of 2014. Sales recorded the highest quarterly sales and have shown growth for 59 consecutive quarters since the third quarter of 2005.

The company explained that despite ongoing uncertainty due to the prolonged COVID-19 pandemic and intense competition, both sales and profits grew year-on-year thanks to the strength of its brand competitiveness.

On a cumulative basis for the first three quarters, sales increased by 1.4% year-on-year to 5.7501 trillion KRW, and operating profit rose by 3.1% to 964.6 billion KRW. Both sales and operating profit set new all-time cumulative records.

The improvement in cumulative operating profit was attributed to a reduction in the decline of operating profit in the beauty business, which was the most severely impacted by COVID-19, from 15.3% in the first half to 6.7% in the third quarter, along with continued strong performance in the household goods (HDV) and beverage (Refreshment) businesses.

By business division, the beauty business recorded sales of 1.1438 trillion KRW and operating profit of 197.7 billion KRW in the third quarter alone, representing decreases of 1.5% and 6.7% respectively compared to the same period last year.

Despite continued weakness in major cosmetic channels due to COVID-19 and a 96% decrease in the number of tourists compared to the previous year, sales quickly recovered driven by domestic and international demand for luxury brands such as ‘Whoo’ and the derma cosmetics brand ‘CNP’.

Additionally, the reduction in sales decline at duty-free channels, which account for one-third of cosmetic sales, narrowed compared to the first half, contributing to improved performance.

In China, despite it being the off-season for cosmetics, digital channels centered on Whoo, O Hui, and CNP showed strong results, achieving 22% sales growth. In particular, Whoo achieved excellent results on China’s leading digital channel by ranking first in Alibaba’s Tmall Super Brand Day for basic cosmetics in August.

The household goods business achieved sales of 508.8 billion KRW and operating profit of 66.8 billion KRW, increases of 26.8% and 47.9% respectively compared to the same period last year.

Rien’s ‘Dr. Groot’ broke stereotypes about hair loss products with stylish packaging and sophisticated scents, surpassing 10 million units sold within three years of launch despite being priced more than four times higher than competitors. It expanded its consumer base beyond men to women and the MZ generation, successfully establishing itself in online malls with a flexible channel strategy suited to the digital era, raising expectations for growth.

‘Bellmon’ continued its strong growth through active digital marketing, and Safran’s ‘Aura’ sustained growth as consumer preference for eco-friendly products without microplastics increased.

The food and beverage business recorded sales of 418 billion KRW and operating profit of 63.2 billion KRW, increases of 3.8% and 15.1% respectively compared to the same period last year.

Despite a challenging business environment due to COVID-19, the longest rainy season on record, and frequent typhoons, sales growth continued thanks to strengthened product lineups of major brands such as ‘Coca-Cola’, ‘Monster Energy’, and ‘Seagram’s’, as well as strong performance in online and delivery channels.

Cha Seok-yong, Vice Chairman and CEO of LG Household & Health Care

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