Aekyung Industrial's Operating Profit Plummets 44% Due to COVID-19 Impact (Comprehensive)

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[Asia Economy Reporter Yujin Cho] Aekyung Industrial recorded poor results as its cosmetics business continued to deteriorate due to the impact of the novel coronavirus disease (COVID-19).

On the 5th, Aekyung Industrial announced that its consolidated operating profit for the third quarter of this year was preliminarily estimated at 8.2 billion KRW, down 44.7% compared to the same period last year. During the same period, sales amounted to 152.2 billion KRW and net profit was 4.5 billion KRW, decreasing by 11% and 56.9%, respectively, compared to the previous year.

As COVID-19 prolonged, worsening conditions in domestic and overseas markets led to continued sluggish sales in the cosmetics business. However, the household goods business recorded sales growth due to sustained demand for hygiene products and strengthened digital channels.

The cosmetics business posted sales of 47.1 billion KRW and operating profit of 3.5 billion KRW, down 37% and 65.1%, respectively, compared to the same period last year. The cosmetics market shrank due to mask-wearing and reduced demand amid the spread of COVID-19, and color cosmetics, which are the main products of Aekyung Industrial’s cosmetics brands, were hit harder.

On the other hand, the improvement in demand within China led to overseas sales increasing by 5% compared to the same period last year and by 88% compared to the second quarter, marking a positive turnaround. In particular, the representative brand Age 20’s 'Essence Cover Pact' expanded its market share in the BB category on China’s Tmall compared to the previous year, further enhancing brand awareness.

The household goods business recorded sales of 105.1 billion KRW and operating profit of 4.7 billion KRW in the third quarter, with sales increasing by 9.1% and operating profit decreasing by 3.2% compared to the same period last year.

The household goods business continues to grow steadily as sales through digital channels increased by 30% year-on-year and 42% quarter-on-quarter through continuous strengthening of digital channels. Additionally, due to the prolonged impact of COVID-19, the hygiene-specialized brand 'Lapsin' has consistently shown strong sales, and hair care products have driven performance by expanding overseas into China, Vietnam, and other markets. Operating profit declined due to increased digital-focused marketing investments to strengthen brand power.

Aekyung Industrial is continuing preparations for the post-COVID era amid the uncertain market environment caused by the prolonged pandemic. To this end, Aekyung Industrial is continuously investing in strengthening domestic and international digital channels and digital marketing, and is expanding its presence in the global digital market.

As a result, in June, the cosmetics business opened an Age 20’s brand store on Amazon, the world’s largest e-commerce platform, marking its first step into the U.S. market.

Subsequently, it officially entered Shopee, Southeast Asia’s largest online commerce platform, renewed the Luna flagship store on China’s Tmall, and is strengthening marketing efforts.

In the household goods business, it launched the ‘Today Departure’ delivery service on Naver Brand Store in August and continues to strengthen investments in domestic and international digital marketing.

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