AmorePacific net hurt by recalls

AmorePacific said Tuesday that it saw stable sales growth in domestic and global markets in the third quarter but was hit hard by its massive recall of toxic toothpaste in September.

Revenue at the nation’s No. 1 cosmetics and household goods company shot up 22.9 percent year-on-year to 1.65 trillion won ($1.45 billion) from July to September and operating profit was 219.7 billion won, up 16.7 percent over the same period.

Net profit tumbled 0.4 percent year on year during the third quarter to 151.4 billion won from the costs of recalling 11 types of its toothpastes that included toxic chemicals.

“An estimated 35 billion won was reflected in the Q3 earnings report,” said AmorePacific. “Additional costs may happen for the fourth quarter.”

AmorePacific, a business division under the eponymous group which includes cosmetics labels such as Sulwhasoo, Hera and Laneige, released third-quarter earning results the same day, reporting a 23 percent year-on-year growth to post 1.4 trillion won in revenue. Operating profit edged up 2 percent to 167.5 billion won.

Its domestic business had 1.7 trillion won in sales, a 22 percent soar largely thanks to strong sales in duty-free shops and online channels.

In the global market, the cosmetics company posted 407 billion won in sales, a 27 percent year-on-year rise. Operating profit was 4.7 million won, increasing 23 percent year-on-year.

The global sales were nevertheless strongly boosted by sales of Sulwhasoo, Laneige, Mamonde, Innisfree and Etude House, all of which have been well-received globally.

Within global sales, those sold in the Asian market rose by 29 percent compared to the same period last year. In the North American market, the company said it expanded its presence by securing retail channels, which saw a 17 percent year-on-year increase.

Online channel sales expanded by nearly 50 percent year-on-year.

An AmorePacific spokesperson said the company has been focusing on strengthening the company online shop, to respond to the fast paradigm shift from offline to online. Home-shopping sales also grew but the company said it will minimize its focus on television sales.

Among the brands not included in the AmorePacific division, Etude House saw the biggest growth, posting a 34 percent increase in sales, which reached 75.7 billion won. The brand turned its first profit in the third quarter.

Sales of Innisfree expanded 34 percent year-on-year, recording 176.9 billion won in sales. Its operating profit rose 56 percent to 37.2 billion won.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]