Housing Market Shows Signs of Recovery
Hanssem Q2 Operating Profit Estimated to Rise 1200% YoY
Strong Performance Expected from LX Hausys, Hyundai Livart, and Others
Recently, the housing market has shown signs of recovery, brightening the performance outlook for the furniture and interior industries in the second quarter. With raw material prices also declining, there is growing optimism for a performance rebound in an industry that has experienced a prolonged slump.
According to financial information firm FnGuide on the 17th, Hanssem's second-quarter sales are projected at 515 billion KRW, with an operating profit of 17 billion KRW. While sales are expected to remain at a similar level compared to the same period last year, operating profit is forecasted to increase by 1,276%.
Hanssem was hit hard by the real estate downturn, posting losses for three consecutive quarters starting from the third quarter of 2022. In response, since last year, the company has been changing suppliers to stabilize raw material procurement, restructuring unprofitable business segments, and streamlining dealerships. Although it recorded profits from the second to the fourth quarter of last year, the results were still disappointing compared to the pre-COVID-19 period. However, as housing transactions began to rise this year, the company has embarked on a full-scale performance improvement. Operating profit in the first quarter of this year was 13 billion KRW, marking a turnaround to profit compared to the same period last year and an increase of over 60% from the previous quarter.
The solid performance in the second quarter is largely attributed to the recovery in housing transactions. According to data from the Korea Real Estate Board, apartment transactions in the first quarter reached 105,677 units, a 20% increase compared to the same period last year. Additionally, apartment sales in Seoul last month are estimated to have exceeded 5,000 units. The last time monthly apartment transactions in Seoul surpassed 5,000 units was in May 2021.
Hanssem is anticipating a full-scale performance rebound. As of the first quarter, the price of PB board, one of the key raw materials, was 9,211 KRW per sheet, down by more than 300 KRW from 9,598 KRW last year. Raw material prices remained stable in the second quarter, and combined with the recovery in housing transactions, the company expects overall performance improvement throughout this year.
LX Hausys is also expected to post solid results in the second quarter of this year. LX Hausys is projected to record sales of 931 billion KRW and an operating profit of 41 billion KRW in the second quarter. Compared to the first quarter’s sales of 849 billion KRW and operating profit of 32 billion KRW, this represents improvements of 9% and 28%, respectively.
In April, LX Hausys appointed actress Jeon Ji-hyun as its model and launched a new window product called ‘View Frame.’ Amid the recovery in housing transactions, the company’s aggressive marketing efforts have helped its window products contribute to performance improvement.
Hyundai Livart, which surpassed Hanssem to become the number one furniture company in terms of sales by recording 504.8 billion KRW in sales and 6.8 billion KRW in operating profit in the first quarter, is expected to continue its strong performance in the second quarter. Although specific second-quarter performance forecasts have not been compiled, it is anticipated to benefit from the recovery in housing transactions, similar to its competitors.
Hyundai Livart’s success in the first quarter was largely due to its focus on the business-to-business (B2B) market, its main market, and its strategy to expand the premium segment. The overall second-quarter performance is expected to be driven by B2B, while aggressive marketing aimed at the business-to-consumer (B2C) market is also expected to partially reflect in the results.
An industry insider said, "The second quarter is a period with many weddings, generally leading to high demand for furniture and interior products," adding, "As housing transactions gradually begin to recover, there is internal optimism that solid performance can be maintained in the third and fourth quarters as well."
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