LG Household & Health Care reports lower-than-expected net profit in Q3

Industry

Published: 27 Oct. 2022, 17:56

LG Household & Health Care reports lower-than-expected net profit in Q3

LG Household & Health Care's headquarters in Gwanghwamun, central Seoul [LG HOUSEHOLD & HEALTH CARE]

LG Household & Health Care reported a lower-than-expected net profit of 127.4 billion won ($89.9 million) in the third quarter, down 46.8 percent on year, as the company suffers from rising production costs amid higher exchange rates and inflation.

The figure failed to surpass market expectations of 154.5-billion-won net profit compiled by FnGuide.

Revenue fell 7 percent on year to 1.87 trillion won. The figure slightly missed analyst expectations of 1.89 trillion won.

LG Household & Health Care consists of three divisions: beauty, home care and daily beauty and refreshment.

The company's beauty division, selling brands such as The History of Whoo, O Hui and belief, saw sales fall 23.1 percent on year to 789.2 billion won. Operating profit fell 68.6 percent on year to 67.6 billion won.

Regarding the overall fall in sales and profits, the company said in a statement that "lockdowns that are still happening time to time in China in the third quarter had an impact on sales, along with the Russia-Ukraine war pulling up raw material prices and the high exchange rate increasing production costs."

Despite the dip, the company said it plans to release more premium cosmetics products in China in preparation for the country's economy recovery.

The home care and daily beauty division, which sells laundry detergents and toothpastes, logged sales of 587.3 billion won, up 8.8 percent on year. However, operating profit fell 11.8 percent on year to 56.1 billion won.

Sales rose due to more expensive brands such as Physiogel selling well, increasing 21 percent on year. But it was still difficult to see an on-year rise in operating profit due to high exchange rates and higher raw material costs.

Its refreshment division, selling drinks such as Coca-Cola and Monster Energy, saw sales rise 11.3 percent on year to 493.9 billion won. Operating profit rose 4.9 percent on year to 66.3 billion won.

The company said sales of zero sugar products rose due to more consumers wanting to pursue healthy lifestyle. Sales of Coca-Cola Zero rose 29 percent on year. Monster Energy sales rose 28 percent on year, with the company stating the release of Monster Energy Zero, a zero sugar drink, helped growth.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]