Amorepacific Group Reports Q2 Operating Profit of 104.6 Billion KRW, Up 188.5% Year-on-Year

[Asia Economy Reporter Seungjin Lee] Amorepacific Group recorded sales of 1.3034 trillion KRW and operating profit of 104.6 billion KRW in the second quarter of 2021. This represents a 10.4% increase in sales and a 188.5% increase in operating profit compared to the same period last year.

In the second quarter of this year, Amorepacific Group achieved growth in both domestic and overseas sales by strengthening product competitiveness and maintaining strong growth in online channels. Especially in overseas markets, where confusion intensified due to the spread of the COVID-19 Delta variant, Amorepacific’s overseas sales grew nearly 10% thanks to the strong performance of online channels. The group’s total cosmetics segment sales for the second quarter amounted to 1.2206 trillion KRW.

The flagship affiliate Amorepacific posted sales of 1.1767 trillion KRW, up 11.5% year-on-year, and operating profit of 91.2 billion KRW, up 158.9%. In the domestic business, Amorepacific recorded sales of 741.8 billion KRW, up 13%, and operating profit of 82.1 billion KRW, up 62.3%. Overseas business sales grew 9.8% to 445.2 billion KRW, turning to a profit with an operating profit of 9.4 billion KRW.

In the domestic market, luxury brands and online channels drove overall sales. Domestic online channel sales grew by more than 40%. By adjusting the order and proportion of media combinations according to marketing goals and budgets, the cosmetics segment’s operating profit also increased.

Domestic Market Online Sales Grow Significantly

Luxury brands strengthened digital marketing through collaborations with major platforms, resulting in significant growth in online sales. They also enhanced their product portfolios by launching items such as Hera’s ‘Black Cushion’ and Vitalbeautie’s ‘Metagreen Shake Me’. Premium brands maintained strong growth in online channels centered on major digital platforms, expanding their product lineups with launches like IOPE’s ‘Retinol Expert 0.2%’ and Cubeme’s ‘Collagen Cube First·Plus’.

Laneige continued various collaborations, such as releasing the ‘Neo Cushion Matte Phantom Violet’ in partnership with Galaxy Buds Pro. Daily beauty brands sustained double-digit sales growth in online channels. Brands like Ryo, Mise-en-sc?ne, Happy Bath, and Illiyoon focused on nurturing functional premium lines, laying a foundation for growth.

Sulwhasoo Jaumsaeng Essence

China, Sulwhasoo ‘Jaumsaeng’ Grows 60%

In overseas markets, sales grew in most regions including Asia, North America, and Europe. Online channel growth continued in key countries, and cost efficiency improvements significantly enhanced profitability.

In China, Sulwhasoo’s ‘Jaumsaeng’ line was intensively nurtured, resulting in an impressive approximately 60% growth in total brand sales. Luxury brands led growth in the Chinese market, with online sales nearly doubling. In the ASEAN region, interest in luxury anti-aging products increased, with Sulwhasoo sales growing by more than 60%. Laneige and Innisfree also achieved double-digit growth, continuing overall strong sales.

Notably, sales growth was achieved even in North American and European markets, where COVID-19 spread remains ongoing. In North America, Innisfree’s entry into Amazon boosted online sales, and Sulwhasoo’s solid growth at Sephora contributed to overall sales increases. In Europe, growth was driven by expanded Sephora sales of Innisfree and Laneige. Laneige also secured new growth momentum by entering the UK e-commerce channel ‘Cult Beauty’.

Expansion of Online Sales... Profitability Improvement

Major subsidiaries showed improved profitability due to expanded online sales and continuous channel efficiency improvements.

Innisfree saw strong sales of high-functional products like Black Tea Ampoule and continuous expansion of online sales. It also succeeded in turning a profit due to improved profit structure from offline channel efficiency. Est?e Lauder maintained high growth in both sales and operating profit through strengthened competitiveness of key products such as Atobarrier and improved product mix. Etude’s overall sales declined due to a decrease in offline stores, but the expansion of online sales ratio reduced the deficit.

Espoir increased e-commerce sales by expanding digital platform entries, but fixed costs of offline stores increased slightly widening the deficit. Amos Professional saw declines in both sales and operating profit due to reduced duty-free channels to focus on salon business, brand renewal of Ayunchae, and increased investment from digital transformation. O’sulloc’s sales increased by more than 50% year-on-year thanks to high growth in online sales and increased sales at Jeju Tea Museum. It also succeeded in turning a profit by improving channel mix and optimizing offline channel costs.

In the second half of this year, Amorepacific Group plans to continue its management strategy of strong brand cultivation, digital transformation, and business structure improvement. To this end, it will nurture ‘engine products’ that reflect the unique value and zeitgeist of brands, accelerate collaboration with domestic and international digital platforms, and continue the growth of online channels. Additionally, it will continue business structure improvement efforts to enhance profitability and foster new growth engines such as health functional foods and derma cosmetics.