LG Household & Health Care Reports 52.6% Drop in Q1 Operating Profit Due to China's Lockdown and Ukraine Crisis

[Asia Economy Reporter Moon Hyewon] LG Household & Health Care received a poor performance report for the first quarter of this year due to the impact of China's lockdowns.

LG Household & Health Care announced on the 11th that its sales for the first quarter of this year decreased by 19.2% compared to the same period last year, recording 1.645 trillion KRW, and operating profit decreased by 52.6% to 175.6 billion KRW.

The beauty (cosmetics) business saw declines in sales and operating profit due to the continued difficulties in China caused by the zero-COVID policy, recording sales of 699.6 billion KRW and operating profit of 69 billion KRW. Excluding the Chinese performance, first-quarter sales decreased by 6.4% and operating profit decreased by 0.7% compared to the same period last year.

The HDV (home and daily beauty) business recorded first-quarter sales of 552.6 billion KRW, a 6.1% increase year-on-year, and operating profit of 55.2 billion KRW, a 16.6% decrease. LG Household & Health Care explained that premium daily beauty brands with solid demand such as ‘Belmore’, ‘Elastine’, and ‘Physiogel’, along with leading home care brands, achieved high sales growth, but operating profit growth was difficult due to cost burdens from rising raw material prices and logistics costs.

During the same period, the Refreshment (beverage) business achieved sales growth of 9.9% to 392.7 billion KRW and operating profit growth of 2.6% to 51.4 billion KRW. LG Household & Health Care analyzed that the overall performance growth was driven by the high growth of ‘Coca-Cola’ and ‘Monster Energy’, which recorded double-digit growth rates again this year. Non-carbonated beverages ‘Powerade’ and ‘Toreta’ expanded consumers’ choices who have a high interest in health, leading growth.

An LG Household & Health Care official said, “Although growth in the beauty (cosmetics) business was difficult due to the worst political, economic, and social situations unfolding in the Chinese market and the global rapid rise in raw material prices caused by the Ukraine crisis, HDV and Refreshment maintained solid performance, partially offsetting the impact from China.” “Last month, we signed an acquisition agreement for The Creme Shop to expand our North American beauty business, and we are continuously making efforts to diversify the market by enhancing local marketing and sales capabilities and preparing for full-scale growth in the North American market,” the official added.

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