Amorepacific Group and LG Household & Health Care (LG H&H), two leading players in South Korea’s cosmetics industry, reported contrasting results in the third quarter. Amorepacific exceeded market expectations, driven by robust sales in North America, while LG H&H fell short, facing a decline in revenue from the region. Analysts highlighted the disparity as a reflection of the companies’ differing adaptability to the North American market, where demand for K-beauty products has grown.
Despite Amorepacific’s strong earnings, some securities firms remain cautious. They point to the slowing growth rate of COSRX, a popular brand it acquired last year and considered central to its U.S. expansion. In response, some brokerages lowered their target prices.
According to the Financial Supervisory Service on Nov. 4, Amorepacific Group reported consolidated revenue of approximately 1.068 trillion won (around $779.57 million) for the third quarter, an 11% increase year-over-year. Operating profit surged 160% to about 75 billion won ($54.74 million), while net profit rose 23.7% to 51.6 billion won ($37.68 million).
The strong performance of its subsidiary, Amorepacific Corporation, was driven by a global rebalancing strategy focused on North America. Overseas revenue climbed 36% to roughly 431.3 billion won, with operating profit reaching around 24.7 billion won ($18.03 million). Sales in the Americas grew significantly, rising 108% to about 146.6 billion won ($170.5 million), while sales in Europe, the Middle East, and Africa (EMEA) saw a remarkable 339% increase, reaching approximately 54.5 billion won ($39.78 million).
The company credited its growth to the integration of COSRX, which has seen success on Amazon in the U.S., alongside strong sales of Innisfree and Laneige. Amorepacific completed its acquisition of COSRX last year.
In China, historically a core market, its sales dropped 40% year-over-year, although the resulting operating loss was kept to 30 billion won ($21.9 million), lower than anticipated.
The domestic revenue fell 1.6% year-over-year to 534.5 billion won ($390.31 million); however, improved margins in duty-free and direct sales channels boosted operating profit by 151% to 48 billion won ($35.04 million). Additionally, the daily beauty division returned to profitability compared to last year.
In contrast, LG H&H’s consolidated revenue in the third quarter declined by about 2% year-over-year to 1.7136 trillion won ($1.25 billion), with operating profit down 17.4% at 106.1 billion won, below the market forecast of 142.3 billion won ($77.45 million). Net profit dropped 19.4% to 73.5 billion won ($53.65 million).
The revenue declined across the cosmetics, household goods, and beverage divisions, though operating profit in the cosmetics segment increased by 43% to 11.4 billion won ($8.32 million). In contrast, household goods and beverages saw operating profits decrease by 11.8% and 27.5%, respectively. LG H&H noted growth in cosmetics through online and health & beauty (H&B) stores, but weaker duty-free sales and overseas restructuring hampered revenue.
The cosmetics manufacturer’s overseas revenue grew by 3.5%, reaching 460.2 billion won ($335.96 million). Sales in China rose 12% to 153.9 billion won ($112.35 million), while Japan saw a 10% increase to 96.1 billion won ($70.15 million). In contrast, North American sales declined by 16%, falling to 125.3 billion won ($91.45 million). Despite introducing new products under brands like The Face Shop, belif, and CNP in North America, ongoing restructuring efforts weighed on overall revenue.
“The strategy remains sound,” commented Hana Securities researcher Park Eun-jung, “but declines in high-margin channels and greater investment in yet-to-be-profitable channels and regions indicate that the profitability of its cosmetics segment may remain under pressure until the first half of next year.”
