Hot streak: LG H&H breaks financial records on the back of China’s unwavering appetite for luxury beauty
LG Household & Healthcare (LG H&H) is a consumer goods company that manufactures cosmetics, household goods, and beverages.
Brands in the company’s cosmetics portfolio include The History of Whoo, The Face Shop, Belief and Su:m37.
The company continues to feel the effects of the COVID-19 pandemic, with offline channels experiencing sharp decline in sales as a result of the plunge in tourism and store closures.
Despite this, sales and operating profit of its beauty divisions quickly recovered to pre-COVID levels due to the fast growth in luxury cosmetics and overseas markets.
The business saw sales increase 14.3% to KRW2.3tn and operating profit increased 18.4% to KRW473bn in the first half of 2021.
Additionally, the firm also owns several mass personal care brands, including hair care brand Dr Groot and derma beauty brand Physiogel.
Combined, its beauty and personal care brands sales increased 14.9% to KRW2.9tn while operating profit recorded an increase of 17.4% to KRW573bn.
This robust growth was attributed to the strong demand for luxury cosmetics, especially in China.
“Despite intensifying competition in the Chinese luxury cosmetics market, major luxury brands such as Whoo, Ohui and Su:m37 performed well, confirming the high demand in the local market,” said the firm in its report.
In particular, The History of Whoo saw solid sales growth in China based on its strong brand position amid the fierce competition with global brands in the market.
This resulted in an outstanding first half for the prestige beauty brand, which continued its hot streak with a 40% growth overall.
In the same period last year, the brand managed to surpass KRW1tn in sales despite being highly dependant on travel retail sales, which were hit badly due to the pandemic.
China sales in the first half were further spurred in part by the 6.18 mega shopping festival, where the company saw strong performances from The History of Whoo, OHUI, Su:m37, CNP and belif.
These six brands brought in total sales of RM58m, up roughly 70% from the previous year’s shopping event.
Individually, all the brands saw exponential double-digit year-on-year growth, with The History of Whoo and Su:m37 experienced sales growth of 72% and 90% respectively.
Furthermore, OHUI, CNP and belief grew by 55%, 57% and 68% respectively.
LG H&H said that this first half expanded at the fastest pace compared to other first-half performances.
The company reported that sales grew 10.3% to KRW4.1tn while profits increased 10.6% to KRW485bn. Operating profits also increased, growing 10.9% to KRW706bn.
During the second quarter, LG H&H sales increased 13.4% to KRW2tn while operating profit increased 10.7% KRW336b. Its net income also expanded by 10.6% to KRW226bn.
All three figures marked the firm's steepest second-quarter growth. The company said its record high 2Q figures were mainly driven by luxury cosmetics.