LG Household & Health Care logged the biggest-ever business performances for the second quarter of this year. The company saw sales surpass 3 trillion won on a half-year basis. The excellent performances were owed to a surge in sales from Chinese tourists’ purchasing of duty-free cosmetics. Thanks to sales growth momentum, the company saw capitalization jump 40 times compared to 2005 when Vice Chairman & CEO Cha Suk took office.
In a public filing, LG Household & Health Care chalked up 225.4 billion won in operating income in the 2nd quarter of the year, a 34.1 percent surge over the same period of last year. The figure is higher than the consensus estimates ranging from 25 percent to 30 percent. The company posted 1.553 trillion won in sales, an 18.5 percent YoY surge. The company saw sales and operating income stand at 3.073 trillion won and 458.9 billion won for the first half of the year, respectively.
LG Household & Health Care is on winning streak with sales rising in 44 consecutive quarters since the 3rd quarter of 2005 when CEO Cha was inaugurated.
The cosmetics business division played a leading role in achieving the best-ever business performance. The division logged 819.9 billion won and 152.8 billion won in sales and operating income, representing a 33.1 percent surge and a 55.1 percent on a YoY basis, respectively.
Such big-ticket cosmetics as Whoo and SU:M37 saw sales swell 56 percent. Sales of the Chinese favorite brands surged at three newly-opened duty-free shops, company officials said. The company saw sales from the duty-free shops jump 96.6 percent in the second quarter of the year. Whoo has emerged as the No. 1 duty-free brand, beating Louis Vuitton.
LG Household & Health Care’s presence in China is noteworthy. Vice Chairman Cha has stressed the Chinese market as the company’s top overseas exploration target since last year. The company saw outlets in Chinese department stores rise from 129 in the first quarter of this year to 140 in the second quarter. The Whoo business in China saw sales jump 56 percent over the second quarter of 2015. In May, LG Household & Health Care opened an SU:M37 outlet at the Jiuguang Department Store in Shanghai, the company’s second in China, and opened it on the Taobao/Tmall.
The life and health care business division posted 373.7 billion won and 37.4 billion won in sales and operating income, respectively.
LG Household & Health Care’s business performances have led to a rise in the company’s capitalization. The company saw its capitalization soar to 17.055 trillion won as of July 26, a 40-fold jump over 437.3 billion won in January 2005 when Chairman Cha took office. The figure is twice the capitalization of LG Electronics, making it the highest-priced stock among LG companies.
“The Korean cosmetics industry racked up $1.927 billion worth of cosmetics exports in the first half of the year, up 39 percent over the same period of last year,” said Sohn Hyo-joo, a researcher at Hi Investment & Securities. Such Korean cosmetics firms as LG Household & Health Care and AmorePacific are forecast to maintain high growth rates, he added.
Business sources said the exacerbating of Korean-Chinese ties, caused by the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) system against North Korea’s international ballistic missile threats, might deliver a blow to the Korean cosmetics industry.
A view of LG Household & Health Care’s outlet in China.(Photos: LG Household & Health Care).
