By Kim Yoo-chul
South Korean beauty and cosmetics conglomerate Amorepacific said Wednesday it has raised 160 billion won or some $130 million by selling a building located in the affluent Gangnam district.
In a filing to the Korea Exchange (KRX), the country's main bourse operator, the cosmetics giant said it has agreed to sell its building, named Sungam Building, to Hanyang Construction for 160 billion won. The filing said Amorepacific will take the payment on April 29.
Established in 1985, the building has served as a main base for the group and its affiliates. However, the building has been commercially leased since the completion of a new headquarters in Yongsan, downtown Seoul, a few years ago.
Initially the value of the building was estimated at 120 billion won. But continued real estate surges in Gangnam forced the local construction operator to pay more for the building.
“The sale of the building is aimed at improving the group's financial soundness and increasing liquidity,” the cosmetics giant said in a statement. As of the third quarter of last year, Amorepacific had 1.27 trillion won in cash and cash-equivalent assets, while the group's debt ratio remained at 27 percent.
Amorepacific, which manages some 40 cosmetic brands, saw an 11.2 percent drop in operating profits last year, year-on-year, on a consolidated basis, an international accounting measurement that includes all Amorepacific's overseas performances. In 2019, its total operating profits remained at 427.8 billion won down from the 848 billion won it reported in 2016.
The company's sluggish performance in China after South Korea's decision to deploy the U.S. missile defense battery system and weak local demand for cosmetics should be held accountable for a profit decrease, said officials.