[Click eStock] "LG Saenghwal Geongang, Now Must Grow in Markets Outside China"

Yuanta Securities maintained a buy rating and a target price of 480,000 KRW for LG Household & Health Care on the 20th.

The second-quarter results recorded sales of 1.7597 trillion KRW and operating profit of 158.5 billion KRW, meeting the market expectation of 157.4 billion KRW in operating profit.

The beauty segment posted sales of 759.6 billion KRW and operating profit of 72.8 billion KRW. Despite continued sales growth in the China business and domestic nurturing channels, sales declined due to the duty-free business (estimated sales of 182.3 billion KRW) and efficiency improvements in the North American business. Although profitability in China weakened due to increased marketing investments, the scale of operating profit in Q2 increased thanks to fixed cost reductions from domestic and overseas restructuring efforts that began in the same period last year. In Q3, sales decline is expected due to a slowdown in the duty-free sector. It is anticipated that the company will pursue a strategy of expanding marketing expenses to defend market share. The China market is expected to face difficulties in Q3 due to a slowdown in offline channels and the absence of large-scale online shopping events. With the slow recovery of the Chinese economy and continued consumption slowdown, offline sales are decreasing, and the lack of major online shopping events may limit growth. Researcher Lee Seung-eun of Yuanta Securities advised, "Now is the time to grow in markets outside of China." The North American business is expected to see high sales growth in retail operations of key brands such as Belif and The Face Shop. In particular, the company is pursuing a market expansion strategy through retail business expansion and new product launches in the North American market.

The HDB (Homecare & Daily Beauty) segment recorded sales of 521.5 billion KRW and operating profit of 33.9 billion KRW. Sales declined due to the impact of restructuring the North American business, similar to the previous quarter. Operating profit improved due to mix improvement from continued growth of premium brands and online channels, the base effect related to domestic and overseas business restructuring costs, and fixed cost reduction effects.

The Refreshment segment posted sales of 478.6 billion KRW and operating profit of 51.8 billion KRW. Sales decreased due to an overall decline in beverage demand caused by favorable weather conditions. Operating profit declined due to continued raw material cost burdens and intensified competition within the beverage market.

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