LG Household & Health Care, Operating Profit Rebounds in Q1 This Year... Signals Profitability Improvement

2024 Q1 Earnings Announcement
Sales 1.7287 Trillion KRW · Operating Profit 151 Billion KRW
YoY Sales Up 2.7% · Operating Profit Up 3.5%

LG Household & Health Care posted solid results in the first quarter of this year. In particular, operating profit showed growth for the first time in two and a half years, signaling a positive turn in profitability.

LG Household & Health Care announced on the 25th that its first-quarter sales this year were preliminarily estimated at KRW 1.7287 trillion, up 2.7% from the same period last year. Operating profit for the same period increased by 3.5% to KRW 151 billion. Net profit rose 17.4% to KRW 113.1 billion, and the operating profit margin increased by 0.1 percentage points to 8.7%.

LG Household & Health Care logo. [Image provided by LG Household & Health Care]

This is the first time in four quarters since the first quarter of last year that LG Household & Health Care has shown sales growth in quarterly results. Operating profit also showed growth for the first time in ten quarters since the third quarter of 2021. The company’s first-quarter sales exceeded the securities market forecast (KRW 1.7055 trillion) by 1.4%, and operating profit also surpassed the forecast (KRW 129.5 billion) by 16.6%.

Looking at the first-quarter results by business segment, operating profit increased in all divisions. Although sales in the Home Care & Daily Beauty (HDB) division slightly declined, sales growth in the Beauty and Refreshment divisions drove overall sales growth.

The Beauty division posted first-quarter sales of KRW 740.9 billion, up 5.6% year-on-year, and operating profit of KRW 63.1 billion, up 3.1%. The increase in sales was driven by the renewed launch of the 'The History of Whoo' product line and strong growth in domestic online and offline channels. Globally, operating profit also rose as profitability improved in the Chinese and North American markets.

In particular, sales of renewed 'The History of Whoo' products containing the next-generation anti-aging ingredient NAD+, such as 'The History of Whoo Bicheop Ja Saeng Essence 4.0' and 'Cheongidan,' performed well. Strengthened marketing activities increased demand from domestic and international customers, leading to sales growth in online and Health & Beauty (H&B) channels. However, duty-free sales slightly declined. In China, online sales expansion led to single-digit growth, while 'The History of Whoo' achieved double-digit growth. Operating profit also increased thanks to improved profitability in China and North America.

During the first quarter, LG Household & Health Care launched new beauty products including 'The History of Whoo Bicheop Ja Saeng Essence 4.0' and 'belif Bomb Cream™ Duo 2nd Generation.' To strengthen the sun care category, the company introduced 'Sunquid,' an ultra-light liquid-type sun product, across 10 subsidiary brands including CNP.

The Refreshment division recorded first-quarter sales of KRW 434.4 billion, up 3.6% from the same period last year, and operating profit of KRW 52.5 billion, up 1%. Sales growth was driven by strong performance of major brands such as Coca-Cola and enhanced response to the zero-calorie beverage market. In particular, 'Coca-Cola Zero' and 'Monster Energy' continued their growth momentum. However, operating profit showed only slight improvement due to cost pressures from raw materials and other expenses.

The Refreshment division strengthened its 'zero portfolio' by launching numerous zero-calorie beverage new products in the first quarter. Coca-Cola released 'Coca-Cola Zero K-Wave' targeting the global K-POP fandom. Monster Energy introduced 'Monster Energy Ultra Peach Kin,' and the zero-calorie beverage 'Fanta Zero Orange Flavor' was also launched.

The HDB division was the only segment to see a slight decline in sales. First-quarter sales in HDB fell 1.7% year-on-year to KRW 553.4 billion, while operating profit rose 8.3% to KRW 35.4 billion. Major brands such as Physiogel, Dr. Groot, and Usimol continued sales growth, but sales declined due to overseas business streamlining. On the other hand, operating profit increased thanks to premium brand growth and restructuring effects in North America.

In Daily Beauty for the first quarter, brands such as Himalaya Pink Salt and Usimol launched the whitening toothpaste 'Bora Whitening Toothpaste,' and Dr. Groot introduced the new 'Multi-Perfection Line' for intensive hair loss care. The fabric softener brand Aura released 'Aura Saenghwa Capsule Innovation 3 Types,' applying biodegradable fragrance capsules.

Meanwhile, LG Household & Health Care has designated this year as the first year of profitability improvement. In his New Year's address, Lee Jung-ae, CEO of LG Household & Health Care, emphasized, "2024 must be a turning point year for new growth, shaking off the sluggishness of the past two years."