LG H&H Sales and Net Profit Continue to Fall, Down 0.5% and 19.6% Respectively
- Chaileedo Press
- Jul 27, 2023
- 2 min read
LG H&H seems to be ramping up its presence in other markets and reducing its dependence on the Chinese market in parallel.
Today (July 27), LG Household & Health Care (LG H&H) released its Q2 and half-yearly financial results for 2023. In the first half of 2023, the group reported sales of nearly KRW3.5 trillion, down 0.5% year-on-year, and a net profit of KRW193 billion, down 19.6% year-on-year.
In Q2 2023, LG H&H reported sales of KRW1.808 trillion, down 3% year on year, and net profit of KRW96 billion, down 23.5% year on year.
By region, South Korea's local business posted sales of KRW2.466 trillion in the first half of the year, down 1.3 percent year-on-year, while both China and Japan declined, down 9.1% and 8.5% year-on-year, respectively. The North American business rose sharply, up 20.9% year-on-year. Earlier, Cha Suk-yong, former CEO of LG H&H, said, "To become a truly global beauty company, we must continue to expand our business in North America, the world's largest trendy market."
By division, the Beauty division recorded sales of KRW78.1 billion in Q2 2023, down 8.5% year-on-year, and operating profit of KRW70 billion, down a whopping down 24.9% year-on-year. Regarding the decline in this segment, the group said it was dragged down by the single-digit decline in China after the recovery of Chinese consumption.
In addition, the HDB (Home Care & Daily Beauty) division posted sales of KRW54.6 billion in the second quarter, up a modest 0.5% year-on-year, and operating profit of KRW28 billion, down a whopping 53.6% year-on-year. According to the group, which said that the decline in operating profit was mainly due to persistent cost headwinds and restructuring costs.
LG H&H is said to have brands such as Whoo, Sum37°, Perioe, and Saffron. According to publicly available information,the group’s dependence on the China market (i.e., the share of China sales in the group's total sales) was at one point as high as 68% in the first quarter of 2021. the dependence also reached 50% in the same period of 2022.
However, for the full year of 2022, the overall performance of the Chinese market declined. The financial report specifically mentions that the overall performance of the Beauty division, including commercial and travel retail within China, was significantly and negatively impacted by the rapid spread of the COVID-19 outbreak in China in the fourth quarter of 2022.
Against this backdrop, LG H&H appears to be intentionally ramping up its efforts in other markets to synchronize and reduce its reliance on the Chinese market.
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