Yesterday (October 26), LG Household & Health Care (LG H&H), a Korean cosmetic company released its financial report for the fiscal third quarter, revealing a decline in sales and operating profit. Despite the continuous sales growth in the Refreshment division, the company faced challenges due to a drop in sales in the Beauty and Home Care & Daily Beauty (HDB) divisions.
The sales for the quarter amounted to 1,746 billion won ($1.29 billion), reflecting a decline of 6.6%. The decline in sales can be attributed to the drop in sales of the Beauty division, which achieved net sales of 670 billion won ($495.8 million), down 15.1% compared to the previous year. Moreover, The Beauty division’s profitability was negatively impacted by the slowing economy in China. Additionally, reorganization costs incurred from the domestic franchise business and the North America business further contributed to the decline in operating profit, which reached 8 billion won ($5.9 million), down 88.2% year on year.
In the Home Care & Daily Beauty division, sales amounted to 570 billion won ($421.8 million), down 2.9% year on year. Despite solid sales in the Daily Beauty segment, weak performance in the raw material business resulted in the overall sales decline. The operating profit for the division reached 47 billion won ($34.8 million), down 16.8% year on year, primarily due to persistent fixed cost pressure.
Geographically, LG H&H faced challenges in various regions. In China, the company’s business achieved sales of 137 billion won ($101.4 million), down 28.9% year on year, reflecting a struggle with the recession and weak consumption. However, the company experienced growth in North America, with sales reaching 148 billion won ($109.5 million), up 4.2% year on year. In Japan, sales amounted to 87 billion won ($64.4 million), down 9.6% year on year, while in Korea, sales reached 1,303 billion won ($964.2 million), down 4.3% year on year.