Amorepacific Group returns to profit on boosted overseas sales

[AMOREPACIFIC]

Amorepacific Group is back in the black for the second quarter as it offset a sluggish domestic market with growth in overseas operations.

The beauty and cosmetics conglomerate reported an operating profit of 11.7 billion won ($9.2 million) in the second quarter of 2023 compared to an operating loss of 10.9 billion won in the corresponding period of last year. However, the reported figure fell short of the market consensus of 57.9 billion won as compiled by FnGuide.

The group's sales for the quarter increased by 0.4 percent to 1.03 trillion won, although it remained below the market forecast of 1.04 trillion won.

Its net profit reached 29.6 billion won, surpassing the 24.2 billion won profit expected by the market consensus.

The domestic business revenue of its flagship affiliate Amorepacific suffered a decline of 11.6 percent to 555 billion won, mainly due to its weak duty-free business, which accounted for around 20 percent of total sales.

The beauty company's sales of its luxury brands, including Sulwhasoo, saw a 12 percent decline, suggesting a negative impact from its rebranding efforts.

Additionally, sales of premium brands, represented by Laneige and Hanyul that are priced slightly lower than the luxury brands, decreased by 24 percent due to weak duty-free and overseas e-commerce sales. Similarly, the low-cost daily beauty segment had a sales decrease of 0.4 percent.

However, overseas business revenue witnessed a surge of 27.5 percent to 372.3 billion won.

Particularly notable were sales in the North American and EMEA (Europe, Middle East, Africa) regions. Sales in North America rose by 105 percent, driven by strong performances from core brands such as Sulwhasoo and Laneige. The EMEA region also experienced a 123 percent jump in sales.

The Asian market registered a growth of 14 percent. Despite facing challenges in the Chinese market, which had previously impacted the company's performance, Amorepacific saw a rebound with a growth rate of over 20 percent. Japan also demonstrated a relatively high growth rate of over 30 percent.

Looking ahead, Amorepacific Group plans to focus on enhancing brand value and strengthening internal management during the second half of the year, aiming to recover from the sluggish performance in the initial months of the year. The company is also considering a reorganization of its global business, with an emphasis on regions exhibiting strong growth potential.

"We plan to strengthen distribution partnerships in newly established growth regions and explore various business models to secure continuous global growth momentum," the group said Wednesday.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]