Powered by sales in China, LG H&H beats AmorePacific in cosmetics sector
From left, AmorePacific Group Chairman Suh Kyung-bae and LG Household & Health Care CEO Cha Suk-yong / Korea times file
By Kim Jae-heun
For a long time, AmorePacific Group has kept its No.1 position in the local cosmetics industry. However, it ceded the top spot to LG Household and Health Care (LG H&H) after failing to diversify its business portfolio and respond to the new trend of retail digitization.
According to AmorePacific Group's regulatory filing on Wednesday, its sales last year stood at 7.93 trillion won, down 21.5 percent year-on-year. Its operating profit nosedived by 69.8 percent to 143 billion won.
The group's main cosmetic business subsidiary AmorePacific also saw 20.6 percent and 66.6 percent drops in year-on-year sales and profit, respectively, in 2020.
AmorePacific's earnings were impacted by the COVID-19 pandemic that struck the duty free business and offline cosmetic shops. Its main revenue source was also heavily focused on beauty products, which resulted in a failure to disperse business risks.
Meanwhile, LG H&H put up a good defense by diversifying its main sources of revenue to cosmetics, beverages and daily necessities. It also utilized online platforms to sell premium cosmetic brands such as the History of Whoo, O HUI and S:UM37, which achieved success especially in China.
Without a doubt, LG H&H's business performance in the cosmetics sector was also affected by the COVID-19 pandemic. However, it managed to keep the rate of decline below the double digits.
LG H&H's sales in the cosmetics sector decreased by 6.1 percent to 4.45 trillion won last year, which is 25.9 billion more than that of AmorePacific's. LG H&H's operating profit in the same sector stood at 822.8 billion won, down only 8.3 percent.
LG H&H said it is satisfied with how it managed to minimize the damage caused by the coronavirus pandemic.
“This is the first time that we have risen to the No.1 spots in all three sectors of cosmetics, beverages and daily necessities. We are very happy with the results,” an LG H&H official said.
AmorePacific said it will beef up its online business in collaboration with local e-commerce giants such as Naver Shopping, Coupang, Kakao and 11th Street. The cosmetics firm plans to close down some of its roadside shops and renew some of its cosmetic brands in the first half of this year.
“We will go through major changes this year and have set a goal of achieving sales of 5.6 trillion won and an operating profit of 380 billion won. We will invest more in new growth engines like health functional food and dermatology cosmetics,” an AmorePacific official said.