Aekyung Industrial Reports 25% Decrease in Q3 Operating Profit Due to Rising Raw Material Costs

[Asia Economy Reporter Seungjin Lee] Aekyung Industrial's operating profit for the third quarter of this year declined due to the resurgence of COVID-19 and rising prices of major raw materials. However, sales increased for the second consecutive quarter, showing improvement despite the impact of COVID-19.

Aekyung Industrial announced on the 5th that its sales for the third quarter of this year reached 145.7 billion KRW, and operating profit was 6.2 billion KRW. These figures represent decreases of 4.3% and 25%, respectively, compared to the same period last year. Net profit for the period was 4.4 billion KRW, down 1.1% from the same period last year.

The company explained that the third quarter was affected by worsening business conditions such as the resurgence of COVID-19, global logistics issues, and rising prices of major raw materials.

However, cumulative results for the third quarter showed significant improvement compared to last year. Cumulative sales for the third quarter were 424 billion KRW, a 2.4% decrease compared to the same period last year, while operating profit was 19.7 billion KRW and net profit was 15.6 billion KRW, increases of 0.7% and 62.6%, respectively, compared to the same period last year.

The cosmetics business recorded cumulative third-quarter sales of 161.3 billion KRW and operating profit of 21.4 billion KRW, increases of 11.6% and 166%, respectively, compared to the same period last year. Although domestic performance recovery was delayed due to the resurgence of COVID-19 and the summer off-season, growth in overseas cosmetics sales drove overall cosmetics performance.

Aekyung Industrial achieved 30% growth year-on-year in China, its largest overseas market, by diversifying digital channels beyond Tmall to include Pinduoduo and TikTok, and strengthening marketing efforts. Additionally, sales diversification and expansion are progressing in newly entered countries such as Vietnam and Japan.

The household goods business recorded cumulative third-quarter sales of 262.6 billion KRW, a 9.4% decrease compared to the same period last year, and operating profit turned to a loss of 1.7 billion KRW. Performance declined due to domestic consumption stagnation and intensified competition caused by the resurgence of COVID-19. However, the company is expanding its global presence centered on the hair care brand ‘Kerasys’ in Russia, Central Asia, Japan, and other regions.

Aekyung Industrial stated that it has set global market expansion as a growth engine to prepare for the with-COVID-19 era and is continuously implementing plans to expand its global footprint and diversify its product portfolio. In particular, the cosmetics division plans to strengthen marketing to increase brand awareness and sales in newly entered countries while preparing for major events such as Singles’ Day and Black Friday in the fourth quarter.

The company plans to continue promoting the global expansion of household goods. Centered on ‘Kerasys,’ it is achieving results in China, Russia, Central Asia, and Japan. Recently, it officially entered the Japanese market by collaborating with Japanese distribution companies to start selling Kerasys through online and offline channels nationwide, including Don Quijote, Rakuten, and Qoo10. In Russia, the ‘Kerasys Clinic Line’ has received a positive response, showing growth compared to before the COVID-19 outbreak and continuously expanding sales.

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