Impact of China Lockdown Continues… LG Saenggeon, 3Q Sales and Operating Profit Decline (Comprehensive)

Sales of 1.87 trillion KRW and operating profit of 190.1 billion KRW
Down 7.0% and 44.5% respectively YoY
Adverse factors including China lockdown and raw material price increases

[Asia Economy Reporter Moon Hyewon] LG Household & Health Care received a disappointing Q3 performance due to the continued impact of China's lockdown policy.

LG Household & Health Care announced on the 27th that its Q3 sales this year recorded 1.8703 trillion KRW, a 7.0% decrease compared to the same period last year. Operating profit for the same period fell 44.5% to 190.1 billion KRW.

The lockdown policy in China, which began earlier this year, continued into Q3, leading to an overall economic downturn in China. Additionally, rising raw material prices and exchange rate effects caused by the Ukraine-Russia war increased cost burdens, further worsening the business environment.

Beauty (cosmetics) business Q3 sales decreased 23.1% year-on-year to 789.2 billion KRW, and operating profit dropped 68.6% to 67.6 billion KRW.

LG Household & Health Care explained that Q3 is the off-season for cosmetics, and intermittent lockdowns in the Chinese market further contracted consumption, making growth difficult in both China and duty-free channels. In China, lockdowns delayed the normalization of offline store operations, and government crackdowns on top influencers also impacted online sales.

However, luxury brand sales such as ‘Ohui’ and ‘CNP’ increased by 22% and 2%, respectively.

LG Household & Health Care is also strengthening its premium color cosmetics. The pearl makeup brand ‘Glint’ gained good responses mainly from the MZ generation, being selected as the number one highlighter through word of mouth after its online launch and recently entering the largest domestic H&B store. The Crem Shop is rapidly increasing its interested customer base (460,000 Instagram followers) through new product launches and channel expansion in the U.S.

HD Beauty (home & daily beauty) business Q3 sales grew 8.8% year-on-year to 587.3 billion KRW, while operating profit decreased 11.8% to 56.1 billion KRW.

In particular, ‘Dr. Groot’ enhanced its brand sensibility and functionality by launching the Addict Kiss Edition featuring Klimt’s masterpieces and a microbiome beer yeast nutrition shampoo. ‘Physiogel’ strengthened its premium product portfolio by releasing refrigerated cosmetics Cold Therapy and the Pore Care line Red Soothing Cica Balance.

Refreshment (beverage) business Q3 sales increased 11.3% year-on-year to 493.9 billion KRW, and operating profit rose 4.9% to 66.3 billion KRW. Brands such as ‘Coca-Cola’, ‘Sprite’, and ‘Monster Energy’ continued to grow, and despite cost burdens from rising raw material prices, efficient operations led to increased operating profit. New products launched in the first half of the year, such as ‘Powerade Protein’ and ‘Toreta THE Lacto’, which enhance nutritional content, received great responses and contributed to sales growth.

An LG Household & Health Care official said, “The beauty business was most affected in sales and profit due to the slowdown in Chinese consumption, but we are continuously nurturing luxury cosmetics in preparation for the normalization of the Chinese market. In North America and Japan, we are actively expanding business by launching products that effectively reflect the growing interest in K-beauty and local sensibilities.”

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