LG Household & Health Care Q2 Operating Profit 216.6 Billion KRW...35.5% Decrease YoY (Update)

[Asia Economy Reporter Moon Hyewon] LG Household & Health Care announced on the 28th that its sales in the second quarter of this year recorded 1.8627 trillion KRW, down 7.9% from the same period last year, and operating profit decreased by 35.5% to 216.6 billion KRW. Net profit also declined by 44.3% to 126 billion KRW.

An LG Household & Health Care official explained, "The strengthened lockdown policies in China, which began at the end of March, had a significant impact on local business throughout the second and fourth quarters, and the ongoing Ukraine crisis led to rising raw material prices, making it difficult to achieve growth in sales and operating profit."

The beauty (cosmetics) business recorded second-quarter sales of 853 billion KRW, down 23.6% year-on-year, and operating profit of 93.3 billion KRW, down 57.4%. Compared to the previous quarter, sales improved by 21.9% and operating profit by 35.2%. LG Household & Health Care explained that the resurgence of COVID-19 in China led to lockdowns in major cities such as Shanghai, and most cities including Beijing imposed lockdown orders, resulting in restrictions on going out, store closures, and logistics shipment limitations, which dealt a heavy blow to the Chinese business in the second quarter.

However, despite the depressed consumption environment in China, the ‘Whoo’ brand achieved first place in beauty sales on Douyin and Kuaishou, emerging platforms, during the 6.18 shopping festival, the largest event in China in the first half of the year.

HD Beauty (home and daily beauty) and Refreshment (beverages) businesses both achieved growth in sales and operating profit despite rapidly rising cost burdens. The HD Beauty business recorded second-quarter sales of 543.4 billion KRW, up 9.5% year-on-year, and operating profit of 59.6 billion KRW, up 1.4%. In the gray hair cover market, the launches of ‘Ryeon Muldeulim’ and ‘Dr. Groot Black Recover’ received positive responses.

The Refreshment (beverage) business posted second-quarter sales of 466.4 billion KRW, up 13.9% year-on-year, and operating profit of 63.7 billion KRW, up 10.0%. Increased interest in health and dieting drove sales growth of zero-calorie drinks such as ‘Coca-Cola Zero’ and ‘Sprite Zero’, as well as the low-calorie drink ‘Monster Energy Ultra’.