LG Saenggeon Surpasses 8 Trillion in Sales, Setting an All-Time Record... 'Chaseokyong Magic' Works Again

Operating Profit of 1.3 Trillion Despite COVID-19... Up 5.6% YoY
17 Consecutive Years of Record Performance... Challenges Including Duty-Free Store Sales Decline

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

[Asia Economy Reporter Moon Hyewon] LG Household & Health Care achieved its highest-ever performance last year despite the prolonged COVID-19 pandemic. The so-called ‘Cha Seok-yong Magic,’ which has steadily driven performance improvements since his appointment, is once again credited for this success.

According to LG Household & Health Care on the 28th, last year’s sales reached 8.0915 trillion KRW, up 3.1% from the previous year, and operating profit increased by 5.6% to 1.2896 trillion KRW. Both sales and operating profit have increased for 17 consecutive years.

An LG Household & Health Care official explained, "Despite the global economic downturn and the prolonged COVID-19 pandemic that have contracted the market, we maintained solid performance based on the strong brand power of our luxury cosmetics."

Looking at performance by business segment, cosmetics sales reached 4.4414 trillion KRW, with operating profit rising 6.5% to 876.1 billion KRW. The flagship cosmetics brand ‘Whoo’ saw sales increase by 12%, while ‘O Hui’ and ‘CNP’ also grew by more than 8%.

Household goods (HDB) sales exceeded 2 trillion KRW, reaching 2.0582 trillion KRW, a 9.9% increase from the previous year. Operating profit rose 1.7% to 208.9 billion KRW. Growth was driven by products such as the shampoo Doctor Groot, Himalaya Pink Salt, and the body lotion brand Physiogel.

The beverage business also posted a 6.2% increase in operating profit to 204.7 billion KRW. Sales grew 5.2% to 1.5919 trillion KRW. Strong performances from major beverage brands like Coca-Cola, Sprite, and Monster Energy stood out.

The industry views Vice Chairman Cha’s magic as having been repeated this time as well. Since his appointment in January 2005, Vice Chairman Cha has recorded performance improvements every year for 17 years without fail.

However, despite achieving record-high sales, the company cannot simply celebrate. Cosmetic sales were restrained due to a decline in duty-free store sales in the fourth quarter of last year.

Fourth-quarter sales were 2.0231 trillion KRW, down 3.4% from the same period last year, and operating profit decreased 5.9% to 241 billion KRW.

The main factor was the sluggish performance of the core cosmetics business. Beauty sales in the fourth quarter were 1.1403 trillion KRW, down 13.9% year-on-year, and operating profit fell 16.9% to 187.3 billion KRW.

The underperformance of brands such as The Face Shop, Isa Knox, and Su:m37, which have been operated mainly through road shops, appears to be the cause. Additionally, due to pricing policies, duty-free store sales in December last year were almost nonexistent temporarily, which is also cited as a reason.

In fact, LG Household & Health Care disclosed on the 17th that due to duty-free store pricing policies, duty-free store sales in December last year were almost nonexistent.

If this continues, the first quarter of this year is also expected to be challenging. Currently, half of LG Household & Health Care’s sales come from the cosmetics sector, and particularly, 40% of cosmetics sales come from duty-free stores.

Accordingly, LG Household & Health Care plans to reduce its dependence on China by shifting its market focus to North America this year. Vice Chairman Cha emphasized in this year’s New Year’s address that "we must continue to expand business in the North American market, which is the largest global market and a trendsetter."

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