Endless Consumption Slump in China... Aekyung Industrial's Q3 'Earnings Shock'

Operating Profit at Half the Securities Firms' Forecast
Demand Slump Hit by Worsening Chinese Consumption Environment
Household Goods Also Affected by Domestic Consumption Weakness

Aekyung Industrial posted third-quarter results that fell short of expectations due to weak demand in the Chinese market and increased investments.

Aekyung Industrial announced on the 31st that its consolidated operating profit for the third quarter of this year was tentatively estimated at 9.551 billion KRW. This represents a 48% decrease compared to the same period last year. During the same period, sales decreased by 5% to 165.28 billion KRW, and net profit dropped by 55.4% to 7.55 billion KRW.

Aekyung Industrial CI.

Aekyung Industrial's third-quarter operating profit is only half of market expectations. The securities industry had forecasted Aekyung Industrial's third-quarter operating profit to be around 17.4 billion KRW.

Aekyung Industrial explained, "Sales and profits shrank due to weak demand in China and expanded domestic and overseas investments to secure future growth engines," but added, "We are continuing to achieve results in global and channel diversification through sustained investments."

Looking at the third-quarter performance by business division, the cosmetics business posted third-quarter sales of 57 billion KRW, down 5.2% year-on-year, and operating profit of 3.9 billion KRW, down 53.2%. Domestic sales increased through the optimization of home shopping channel operations and targeting new growth channels such as digital channels and Daiso, but weak demand in China was a significant setback. The expanded marketing investments also impacted the decline in performance.

In China, growth slowed as the consumption environment deteriorated. Aekyung Industrial is conducting marketing activities such as launching localized products and collaborating with famous Wanghong influencers in China. It is also expanding its presence in global markets outside China. In Japan, it has expanded local distribution channel entries centered on LUNA and diversified its product portfolio. In the United States, it is introducing sun care products and working to establish a foothold in the market.

Additionally, in the third quarter, the company focused on brand management aligned with changing consumer trends. Leading brands launched new products such as LUNA Glassy Layer Tint and AGE20’S Velvet Lasting Pact Prua Collaboration Edition, and operated pop-up stores both domestically and internationally.

The household goods business also saw a decline in performance compared to last year due to sluggish domestic consumption. The household goods business recorded third-quarter sales of 108.2 billion KRW, down 4.8% year-on-year, and operating profit of 5.7 billion KRW, down 43.6%.

The household goods business saw growth in personal care product lines such as Kerasis and 2080, along with an increased share of premium products like Lapsin. However, performance declined due to sluggish domestic consumption and cost burdens from intensified competition in digital channels. In global markets, it expanded channels and product categories focusing on strategic countries such as North America and Japan.

An Aekyung Industrial official stated, "We plan to continue domestic and overseas investments for growth," adding, "Along with product development considering global consumers' preferences and market environments, we will strengthen marketing that directly meets consumers, such as pop-up stores, and continue to enhance competitiveness in global markets, especially in non-China countries."

Meanwhile, Aekyung Industrial's cumulative sales for the third quarter reached 508 billion KRW, and operating profit was 43.5 billion KRW. Compared to the same period last year, sales increased by 3%, but operating profit decreased by 13.6%.

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