Furniture and Interior Industry 3Q Performance Rebounds... "Management Efficiency and Cost Ratio Improvement"

Hanssem, Hyundai Livart, LX Hausys Operating Profit Improvement
Shinsegae Casa Reduces Deficit

Furniture and interior companies all saw a rebound in their third-quarter earnings. This is interpreted as a result of tightening belts through management efficiency and cost ratio reduction amid the ongoing real estate market slump.

According to the Financial Supervisory Service's electronic disclosure system on the 13th, Hanssem achieved sales of 480.9 billion KRW and an operating profit of 4.9 billion KRW in the third quarter of this year. Compared to the third quarter of last year, sales increased by 0.7%, and operating profit turned positive. Hanssem had posted losses for three consecutive quarters from the third quarter of last year to the first quarter of this year but returned to profitability starting from the second quarter.

Hanssem's third-quarter performance was the official first report card of CEO Kim Yujin, a woman in her 40s who took office in July. Known in the industry as a "restructuring expert," CEO Kim did not implement artificial restructuring at Hanssem. Instead of workforce reduction, the focus was on improving operational efficiency. This approach is considered successful as it calmed internal unrest among employees and maintained a profit trend. A Hanssem representative explained, "We lowered the cost ratio by 2.2 percentage points compared to the same period last year through cost improvements such as supply chain management," adding, "The proportion of the B2C (business-to-consumer) segment increased, adjusting the sales composition ratio."

Hyundai Livart also improved both sales and operating profit in the third quarter of this year. Sales reached 396.6 billion KRW, up 8.9% year-on-year, and operating profit rose 144.8% to 1.2 billion KRW. Hyundai Livart has been striving to improve performance, turning a 7.6 billion KRW loss in the first quarter into a profit in the second quarter. The strong third-quarter results are attributed to increased brand awareness. Hyundai Livart recently opened a flagship store at The Hyundai Seoul in Yeouido, Seoul, and launched the "Livart Jipterie" TV home shopping program. A Hyundai Livart representative said, "Performance improved due to increased housing transaction volume in the second half and expansion of total interior distribution channels," adding, "The B2B (business-to-business) furniture segment, including office furniture, grew by 53%, leading to profitability recovery."

Shinsegae Casa recorded sales of 62.3 billion KRW and an operating loss of 1.8 billion KRW in the third quarter. Compared to the third quarter of last year, sales decreased by 8.1%, but operating losses were reduced by 69% (4 billion KRW). This performance is considered solid compared to the Shinsegae Group's overall sales decline of 23.4% and operating profit decrease of 13.9% during the same period. Shinsegae Casa has posted losses for five consecutive years from 2018 to last year. However, the deficit has noticeably decreased this year, indicating improved profitability. A Shinsegae Casa representative stated, "Furniture demand revived in the third quarter due to new move-ins and wedding furniture," adding, "The response to new products was also positive."

Interior company LX Hausys reported sales of 864.2 billion KRW and an operating profit of 35.4 billion KRW. Sales decreased by 5.4% year-on-year, but operating profit increased by 130%. An LX Hausys representative said, "Sales declined due to the domestic slump in real estate and other sectors," adding, "Operating profit improved thanks to lower costs of key raw materials such as PVC (polyvinyl chloride) and MMA (methyl methacrylate), increased sales of high-performance insulation materials for construction, and improved profitability of overseas businesses including artificial marble." LX Hausys recently conducted an executive reshuffle by appointing four new directors, emphasizing a "performance-oriented" approach. The plan is to lead organizational changes based on work expertise to find a breakthrough amid the industry's downturn.