Crying and Laughing in China... Cosmetics Industry Sees Q2 Earnings Rebound on Revived Chinese Domestic Demand

Sulwhasoo Jaumsaeng Essence

[Asia Economy Reporter Lee Seung-jin] Despite difficulties faced by the cosmetics industry due to the normalization of mask-wearing, second-quarter earnings rebounded. This was driven by the revival of the stagnant domestic market in China.

According to the cosmetics industry on the 29th, Amorepacific Group's operating profit for the second quarter of this year was 104.6 billion KRW, an increase of 188.5% compared to the same period last year. Sales rose 10.4% to 1.3034 trillion KRW, and net profit surged 2680.2% to 142.8 billion KRW. Excluding hair and body products, the total second-quarter cosmetics sales of the Amorepacific Group were recorded at 1.2206 trillion KRW.

The rebound in second-quarter performance was thanks to strong domestic online sales and overseas cosmetics sales centered on China. In particular, overseas sales in Asia, including China, increased by 8% to 418.6 billion KRW, driving the results. By focusing on nurturing Sulwhasoo’s 'Jaumsaeng' line in China, total brand sales grew by about 60%, and online sales of luxury cosmetics nearly doubled. Due to the strong sales centered on China, the overseas business, which had been operating at a loss, turned profitable.

LG Household & Health Care also continued its growth trend. Its sales for the second quarter this year reached 2.0214 trillion KRW, up 13% from the same period last year, and operating profit increased 11% to 335.8 billion KRW, setting a new record for the second quarter. It is analyzed that luxury brands and demand in the Chinese market led to the strong performance.

LG Household & Health Care’s cosmetics business posted sales of 2.2744 trillion KRW in the first half of the year, up 14.3% year-on-year, and operating profit rose 18.4% to 473.3 billion KRW. Especially during China’s largest online shopping festival in the first half, the ’618 Shopping Festival,’ sales of six cosmetics brands including ‘Whoo’ reached 580 million yuan (approximately 89.3 billion KRW) on Tmall, a 70% increase from last year.

Cosmetics ODM (Original Design Manufacturer) company Cosmax is also expected to see improved performance in the second quarter this year, thanks to growth in the Chinese market. According to financial information provider FnGuide, Cosmax’s second-quarter sales are estimated at 383 billion KRW, a 1.2% increase year-on-year, and operating profit is estimated at 33 billion KRW, up 27% from the previous year.

Cosmax’s sales growth was mainly driven by local Chinese brands. Sales in Shanghai in the second quarter reached 121 billion KRW, a 24% increase year-on-year, while Guangzhou sales remained steady at 33 billion KRW compared to last year. Meanwhile, domestic sales during the same period are expected to have declined 3.8% year-on-year to 201 billion KRW, with Chinese market sales approaching domestic sales.

A cosmetics industry official explained, "The revival of the Chinese domestic market, which had been stagnant due to the impact of COVID-19 last year, was reflected in the second-quarter results," adding, "We plan to focus on online marketing by promoting luxury brands to differentiate from Chinese brands."

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