Cosmetics sales boost LG H&H figures despite China volatility

By Amanda Lim

- Last updated on GMT

Cosmetics sales boost LG H&H figures despite China volatility
South Korea’s LG Household & Health Care has delivered its best quarterly performance with help from its cosmetics division which recorded strong double-digit growth, despite market volatility due to falling numbers of Chinese tourists.

The company’s fourth quarter saw sales increase 14.2% to ₩1.7tn ($1.5bn), while its operating profit increased 13.9% to ₩211bn ($189m).

The boost was driven largely by the cosmetics division, which saw sales surge 18.2% to ₩1.1tn ($983m) won while operating profit increased 13.8% to ₩192bn ($171m).

For FY18, the company’s cosmetics business grew 19.1% and 23.1% in total sales and operating profit respectively.

Beauty leads the pack

The company’s stellar performance was driven by strong demand for its premium cosmetics at home and abroad despite the volatility in the cosmetics market.

Korean beauty brands have been suffering from the sharp decline in Chinese tourist due to the Terminal High Altitude Area Defense (THAAD) dispute.

The South Korean personal care company noted that the domestic environment remained “difficult” and “sluggish” as tourists rates continued to slowly recover.

However, sales of luxury brands such as History of Whoo, su:m37, and O HUI grew significantly in China and the travel retail space, playing a vital role in driving the company’s stellar performance.

Flagship luxury brand Whoo became the first Korean brand to cross the two trillion won ($1.78bn) mark in annual sales.

In addition to the success of Whoo, LG H&H noted the potential of its “next generation brands”, su:m37 and O HUI. Combined, the three premium brands achieved ₩2.6tn ($2.3bn) in sales for FY2018, up 23% from the last year.

LosecSumma, the high-end range from su:m37, grew an astonishing 260% for the year, contributing to the “robust” performance of the brand. The company noted that the brand grew by 40% in the fourth quarter, when it launched in China.

In a similar vein, O HUI’s premium line, The First, saw sales jump 31 percent in the fourth quarter from a year ago, “strengthening its position as a next-generation brand” said the company.

LG H&H attributed the success in both domestic and overseas markets to its “luxury cosmetic focused differentiation strategy”.

Overseas, the cosmetics unit grew by 47% in sales and broke records by surpassing ₩1tn for the first time. The South Korean company attributed the growth to stellar performance in China, which grew 54% yoy.

Topping the charts

With these results, it is very likely that LG H&H will have another chance at outperforming South Korean beauty behemoth AmorePacific Group in terms of sales.

As of the third quarter, AmorePacific total sales and operating profits were ₩3.98tn ($3.72 bn) and ₩519.5bn ($484.74m) respectively. Its cumulative sales grew 1.8% yoy while operative profit decreased 11.8%.

As for LG H&H, it reported that total sales increased 10.6% to ₩1.7tn ($1.98bn), with operating profit rising 9.8% to ₩278bn ($250m) for the third quarter.

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