[At a Crossroads: Listed Company] 4 Years of Losses for TonyMoly... Transforming into a Pet Food Business Operator

[Graphic and Analysis by Heejin Lim]

[Asia Economy Reporter Park So-yeon] TonyMoly, a leading first-generation cosmetics road shop brand, is struggling as it has recorded operating losses for four consecutive years.

This is due to the combined impact of the THAAD (Terminal High Altitude Area Defense) crisis and the COVID-19 situation, which dealt a fatal blow to road shop brands.

With group tourists disappearing, duty-free shops and road shop sales have plummeted, and domestic consumers have also preferred contactless shopping, causing significant damage.

According to the Financial Supervisory Service's electronic disclosure system on the 4th, TonyMoly recorded operating losses and net losses for four consecutive years from 2017 to 2020.

Operating losses increased gradually from 1.9 billion KRW in 2017, 5 billion KRW in 2018, 300 million KRW in 2019, to 25.5 billion KRW in 2020.

Sales sharply declined from 205.7 billion KRW in 2017, 181 billion KRW in 2018, 172 billion KRW in 2019, to 113.5 billion KRW in 2020.

There are four Chinese subsidiaries and five domestic subsidiaries under consolidation, all of which are currently recording net losses.

Among the four Chinese subsidiaries, Shenyang Tori Cosmetics Co., Ltd. and Megacos Cosmetics (Shanghai) Co., Ltd. are in a state of capital erosion.

As of the 2020 business report, total liabilities amounted to 125.7 billion KRW, of which current liabilities?debts to be repaid within one year?were 90 billion KRW. The debt ratio stands at 183.5%, and the current ratio is 86.7%.

Shareholding ratios are identified as Chairman Bae Hae-dong (major shareholder) 32.12%, Jung Sook-in (spouse) 17.01%, Bae Jin-hyung (child) 8.05%, and Bae Sung-woo (child) 8.05%. The total shares held by the major shareholder and related parties amount to 66.13%.

Meanwhile, TonyMoly recently acquired Ocean, the largest domestic single-ingredient feed manufacturer, and declared its entry into the pet market. It purchased existing shares worth 4.8 billion KRW from Ocean’s existing shareholders, including the major shareholder, and invested 4 billion KRW in a paid-in capital increase in Ocean, securing a 76.61% stake and becoming the largest shareholder. Ocean was established in June 2014 and manufactures and distributes premium pet food such as feed and snacks, as well as hygiene products.