Amorepacific seeing triple in ChinaAmorepacific, Korea’s biggest cosmetics maker, aims to almost triple its China sales by 2015 as it expands in Asia to boost the revenue contribution from its overseas operations.
Amorepacific, whose brands include Laneige and Sulwhasoo, is targeting sales of about 700 billion won ($623 million) by 2015 in the world’s second-largest economy, compared with the estimated 258 billion won it aims to bring in this year, Chief Financial Officer and Executive Vice President Bae Dong-hyun said.
It also seeks to acquire luxury cosmetics brands in the U.S. or Europe to expand its product lines, he said.
“We believe China will be our key growth engine, so we plan to aggressively expand there by introducing more brands and expanding distribution channels,” Bae said in an interview in Seoul late last week. “We’ll look for acquisition targets more actively to boost synergies with our existing business.”
Amorepacific is seeking to tap overseas markets as the domestic cosmetics industry will mature in the next few years, Bae said. China’s beauty and personal care products market is expected to surge 58 percent to 255 billion yuan ($40 billion) in 2015 from 2010, according to London-based researcher Euromonitor International.
Global cosmetics makers are tapping that opportunity. L’Oreal, for instance, plans to invest 200 million yuan to expand in Hubei, China, Xinhua News Agency said in November.
L’Oreal had 16 percent of China’s skin care market in 2010, compared with 11 percent for Procter & Gamble, 9.8 percent for Shiseido and 1.6 percent for Amorepacific, SK Securities said in a March 5 report.
Amorepacific aims to boost the contribution of overseas sales to 45 percent of total sales by 2020 from about 13 percent at present, Bae said. The company, which has operations in 10 overseas nations including China, France, Malaysia and Thailand, is preparing to enter Indonesia and India, he said.
“For growth, you have to accelerate the pace of global expansion, especially in the region where demand is expected to grow in double digits,” Bae said. “China and Asean countries meet all the criteria we need for overseas expansion: economic growth potential, disposable income, population and the size of the cosmetics market.”
China’s average disposable income of urban households rose 14 percent last year, government data shows. Indonesia’s middle class grew by 62 percent from 2003 to 2010, according to World Bank estimates.
Shares of Amorepacific have advanced 3.9 percent this year, compared with a 10 percent gain on the Kospi. The stock trades at 20.9 times estimated profit, compared with the 18.8 multiple at L’Oreal and 24 at Estee Lauder, according to Bloomberg data.
The Korean company said last August that it agreed to buy control of French perfume brand Annick Goutal from Starwood Capital, a private equity firm. Bloomberg
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