LG H&H profits drop as cosmetics business declines

[LG H&H]

The second quarter operating profit of LG Household & Health Care (LG H&H) plunged by 27.1 percent on-year to 157.8 billion won ($123.52 million) due to the prolonged sluggishness in the Chinese cosmetics market.

The figure fell short of market expectations of 183.8 billion won compiled by FnGuide.

The revenue of LG H&H also fell by 3 percent compared to the same period last year to 1.81 trillion won. The figure was below the market's expectation of 1.83 trillion won.

"The company's sales decreased mainly due to a decline in the beauty segment's sales," the cosmetics and health products company said. "The operating profit for the company also declined, primarily attributed to persistent cost pressures and expenses related to the reorganization and efficiency improvement of both domestic and US businesses."

The net profit of LG H&H experienced a decrease of 23.5 percent on-year, reaching 96.4 billion won. This figure was below the market's expectation of 113.3 billion won.

By business segments, the company's main cosmetics business faced an 8.5 percent decline in revenue, totaling 780.5 billion won. The operating profit for this segment also decreased by 24.9 percent to 70 billion won.

The company attributed this decline to weak performance in the Chinese market and duty-free business, despite growth in domestic sales channels like department stores and multi-brand stores. Additionally, investments in business efficiency, including the renewal of its flagship cosmetic lines like "The History of Whoo", contributed to the decrease in operating profit.

Whiles sales for its household products and beverage businesses increased, the operating profit for the household products business faced a decline of 53.6 percent, falling to 27.6 billion won. The operating profit for the beverage segment decreased by 5.5 percent to 60.2 billion won due to the rising costs of raw materials.

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