LG Household & Health Care Q4 Operating Profit Down 20%... "Impact of Beverage Division Restructuring"

Net Loss Continues in Q4 Due to Goodwill Impairment
Cumulative Operating Profit at 459 Billion KRW, Down 5.7% Year-on-Year

LG Household & Health Care recorded an operating profit of 43.4 billion KRW in the fourth quarter, a sharp decline of 20% compared to the same period last year. While the cosmetics business segment posted strong results due to growing interest in K-beauty in overseas markets, profitability declined as one-time restructuring costs were reflected in the beverage segment.

According to the Financial Supervisory Service disclosure system on the 4th, LG Household & Health Care's fourth-quarter operating profit was 43.4 billion KRW, down 20.7% year-on-year. Sales increased by 2.7% to 609.9 billion KRW. Net profit continued to show a loss of 89.9 billion KRW. Although operating profit was in the black, net loss was recorded due to goodwill impairment losses from the U.S. subsidiary Avon and Taeguk Pharmaceutical.

On a cumulative basis, annual sales increased slightly by 0.1% to 6.8119 trillion KRW compared to last year, while operating profit fell 5.7% to 459 billion KRW during the same period. Net income rose 24.7% year-on-year to 203.9 billion KRW.

Looking at the fourth-quarter performance by business segment, the cosmetics division posted strong results, but the beverage division’s profitability deteriorated significantly. The cosmetics segment recorded sales of 699.4 billion KRW and operating profit of 10 billion KRW, up 5.4% and 50.3% respectively from the same period last year. This improvement is attributed to the strengthened position of luxury brands in the Chinese market. Thanks to strong performance, sales in the Chinese market grew by about 20%, from 228.6 billion KRW in Q4 2023 to 276.1 billion KRW.

An LG Household & Health Care official explained, "Domestically, sales increased as growth continued in online and H&B channels. ‘The History of Whoo’ achieved strong results in China, strengthening its luxury brand position, and despite increased marketing investments during China’s Singles’ Day, overall sales growth led to improved profits."

However, in the U.S. market, where aggressive expansion of the sales network was pursued, sales decreased by about 10%, from 160.5 billion KRW in 2023 to 143.1 billion KRW. Although brands such as ‘belif’, ‘CNP’, and ‘The Face Shop’ showed explosive sales growth on the U.S. e-commerce platform Amazon, overall sales declined due to restructuring at the U.S. subsidiary Avon.

The beverage business segment recorded an operating profit of 10.2 billion KRW, down 65% compared to Q4 2023. Sales grew 3% during the same period to 411 billion KRW, but operating profit declined due to one-time costs related to workforce restructuring and business efficiency improvements.

The household goods division posted an operating profit of 22.2 billion KRW in the fourth quarter, up 22% year-on-year. Sales slightly decreased by 0.7% to 499.5 billion KRW. Premium brands such as ‘Physiogel’ and ‘Usimol’ showed growth, but overall sales declined due to a domestic economic downturn. Operating profit grew year-on-year thanks to overseas business efficiency improvements and brand and channel diversification strategies.

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