On 24th July 2018, LG Household & Health Care revealed that in 2Q 2018, its sales reached 1.7tr won (€1.3 bn) and its operating profit sat at 267bn won (€205 mn) (+15.1% yoy). Suk-Yong Cha, the company’s CEO announced that this amounts to a net profit of 187bn won (€144 mn), a year-on-year rise of 11.4%.
In the first half of 2018, the total company sales rose to 3.3tn won (+8.7% yoy), while its operating profit increased to 551bn won (€423 mn) (+12.0% yoy), and net profit jumped to 384bn won (€295 mn) and a 10.1% lift.
These figures represent LG H&H highest second quarter and first half results in its history. This has been achieved in spite of “sluggish domestic demand and slow recovery in [the] number of inbound tourists”, the company revealed in a recent press release.
LG H&H has reported sales growth for a total of 51 quarters since the third quarter of 2005, with operating profit also rising for 53 quarters since the first quarter of 2005. This represents “continuous growth” for over 13 years.
Cosmetics: Leading the way
In the second quarter of 2018, Beautiful sales — its cosmetics sphere— increased 23.2% yoy to 953bn won (€732 mn), with an operating profit lift of 30.1% yoy to 194 bn won (€149 mn).
LG H&H note that while the number of new customers in both the South Korean and Chinese cosmetics markets is strong, its luxury brands and developed brand propositions have contributed significantly to these record sales figures.
In 2016, the company’s sales exceeded 1tn won (€768 mn). In July 2018, its international cosmetics brand, ‘Whoo’ also surpassed the 1tn won figure. With a strong focus on its high-end luxury brands including ‘su:m’ and ‘OHUI’, LG H&H has sought to differentiate its lines with diverse and unique product portfolios to enhance competitiveness and awareness amongst consumers.
Cosmetics, otherwise known as Beautiful sales, has shown significantly strong growth in the first half of 2018. These sales have risen 17.4% yoy to 1.9tn won (€1.46 bn), with its operating profit also lifting by increased 24.7% yoy to 406bn won (€312 mn).
Household sales are lower
The second quarter of 2018 has not all been positive sales for LG H&H as its healthy sales, those relating to household goods, dropped 6.0% year on year to 337bn won (€259 bn). Operating profit from these goods has also decreased 27.7% yoy to 27bn won (€20.7 mn).
LG H&H has continued to simplify its business structure to relieve the emphasis on its premium nature. As the company shifts from a short-term strategy to that of mid-to-long term growth and expansion, the sales and operating profit of the company fell. This has in part, resulted from a reduction in the amount of channel inventory and SKU (stock keeping unit) optimisation. While this has short-term implications for its sales and operating profit figures, the company hopes this will increase its transparency and lower its complexity.
In the first half of 2018, these healthy household sales fell by 5.2% yoy to 732bn won (€562 mn). This also resulted in a decrease in its operating profit by 25.4% yoy to 69 bn won (€53 mn).
In April, LG H&H revealed its subsidiary Ginza Stefany’s acquisition of leading beauty retailer, Avon Japan. With an intense eye of business expansion, the South Korean giant sets out to boost its cosmetics portfolio in its domestic marketplace and wider Asian industry.