LG Household & Health Care, 3Q Operating Profit 128.5 Billion KRW... Down 32.4% YoY (Comprehensive)

Sales of 128.5 billion KRW in the same period... 6.6% decrease
Decline in cosmetics profitability due to China's economic slowdown
Beverages continue to grow... household goods sluggish
Domestic franchise business ended, North America restructuring

LG Household & Health Care received a disappointing performance report for the third quarter of this year. The profitability of its cosmetics business declined due to the slowdown in the Chinese economy, its core market, and fixed costs such as manufacturing costs and labor expenses continued to weigh on the company, resulting in a simultaneous drop in operating profit and sales.

LG Household & Health Care headquarters located in LG Gwanghwamun Building, Jongno-gu, Seoul.
[Photo by LG Household & Health Care]

LG Household & Health Care announced on the 26th that its operating profit for the third quarter of this year recorded 128.5 billion KRW, down 32.4% compared to the same period last year. This marks the eighth consecutive quarter of decline since the fourth quarter of 2021.

During this period, sales decreased by 6.6% to 128.5 billion KRW. While sales in the Refreshment segment continued to grow, sales in both the Beauty (cosmetics) and HDB (Home Care & Daily Beauty) segments declined, leading to an overall contraction in company-wide sales.

An LG Household & Health Care official explained, "Due to the economic slowdown in China, the profitability of the cosmetics segment declined, and operating profit decreased due to the termination of domestic franchise operations and ongoing restructuring related to the North American business."

The cosmetics business posted third-quarter sales of 670.2 billion KRW, down 15.1% year-on-year, and operating profit of 8 billion KRW, down 88.2%.

As the economic downturn in China persisted, sales in major channels declined, while domestic consumption channels continued to grow. Duty-free and Chinese sales fell by double digits due to weakened consumer sentiment, whereas domestic H&B and online sales grew. Operating profit decreased due to weak demand in key channels and restructuring costs.

The home care business recorded third-quarter sales of 570.1 billion KRW, down 2.9% year-on-year, and operating profit of 46.7 billion KRW, down 16.8%.

Daily beauty performance remained solid, but sales slightly declined due to ongoing base effects in the raw materials business. Major brands such as ‘Usimol’, ‘FiJi’, and ‘Elastine’ saw sales growth, and Physiogel also grew thanks to strong sales of the DailyMune ampoule product. However, operating profit decreased due to continued fixed cost burdens. In the daily beauty segment, LG Household & Health Care focused on nurturing key premium brands by launching various functional new products, including the ‘Dr. Groot’ Density Care™ Professional Shampoo, which addresses both hair loss and styling, and the ‘Jukyeom’ Gum Care Whitening Toothpaste, which inhibits tooth discoloration.

The beverage business posted third-quarter sales of 505.9 billion KRW, up 2.4% year-on-year, and operating profit of 73.8 billion KRW, up 11.3%.

Sales grew steadily thanks to the continued popularity of zero-carbonated and energy drinks. Coca-Cola Zero and Monster Energy maintained strong demand and sustained growth, and Powerade Zero sales also performed well. Operating profit improved despite ongoing raw material cost pressures, supported by growth in major brands and channel sales.

Going forward, LG Household & Health Care plans to re-enter the Chinese market through its luxury brand ‘Whoo’ while continuing to diversify its overseas business strategies in markets such as the United States and Japan. As part of this effort, it recently renewed ‘Cheongidan’, the flagship product of ‘The History of Whoo’. Cheongidan is one of the most popular products in China and has been renewed for the first time in 13 years since its initial launch in January 2010. To promote Cheongidan, LG Household & Health Care held ‘The Whoo Cheongidan Art Fair in Shanghai’ at the Tank Shanghai Art Center, a complex cultural space in Shanghai, China. This is the first large-scale brand promotion event held by LG Household & Health Care in China in about four years since ‘The Whoo Palace Banquet in Shanghai’ in 2019.

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