Chinese internet influencers at LG H&H’s launch event for new product of The Whoo in Shanghai in August 2023 (File photo by LG H&H)
South Korean cosmetics giant LG H&H Co. has yet to benefit from the global K-beauty boom due to its heavy dependence on China, the world’s largest beauty product importer.
LG H&H known for its premium brand The Whoo said on Thursday its operating profit edged up 0.4% to 158.5 billion won ($114.4 billion) in the second quarter from a year earlier with sales down 2.7% to 1.8 trillion won. In the first half, its profit rose 1.9% while revenue dipped 0.1%.
That compared with smaller South Korean cosmetics makers, which enjoyed the growing K-beauty boom worldwide.
VT Co. famous for its skin care product Reedle Shot was forecast to have seen a 126.5% surge in operating profit and a 47.1% jump in sales during the April-June period, according to analysts, for example.
A naturalism cosmetics maker Manyo Co.’s quarterly profit was estimated to have soared 84% with sales up 52% as it expanded its business in North America.
TOO RELIANT ON CHINA
LG H&H, formerly LG Household & Health Care Ltd., focused too much on China, the sharply slowing world’s second-largest economy, industry sources in Seoul said.
The company’s cosmetics sales to China, including those in the mainland and at duty-free shops, made up 46% of its total beauty product revenue, according to Hyundai Motor Securities Co.
The unit of South Korea’s fourth-largest conglomerate LG Group revamped The Whoo, its flagship brand in China, to revive sales there, but the move has yet to pay off.
The Whoo failed again to get in the top five skincare brand list by sales at Tmall, an e-commerce platform operated by China’s Alibaba Group, during the annual 618 festival, the second-biggest shipping event in the mainland, last month.
The Whoo ad featuring Kim Ji-won, the heroine of the popular South Korean drama series Queen of Tears (File photo by LG H&H)
ACQUISITIONS TO DIVERSIFY MARKETS
LG H&H tried to reduce its reliance on the Chinese markets through acquisitions.
The company took over South Korea’s Vivawave Co. whose premium makeup brand Hince is popular in Japan last September.
LG H&H kept the door open for acquisitions of other companies to expand its presence in Asia ex-China and North America.
Its crosstown rival Amorepacific Corp. started benefitting from a takeover.
The beauty giant known for its premium brand Sulwhasoo was estimated to have enjoyed a 1,111% surge in operating profit with 8.2% growth in sales in the second quarter as earnings of Cosrx Inc. Amorepacific acquired were reflected in the company’s income on a consolidated basis, analysts said.
Cosrx, a South Korean cosmetics maker known for its snail mucin and other products, generated most of its sales in overseas markets.
By Hyung-Joo Oh
ohj@hankyung.com
Jongwoo Cheon edited this article.
