Operating Profit Reaches KRW 60.8 Billion, Up 30% Year-on-Year
Increased Volume of Mask Pack and Sun Care Products in Korea and Southeast Asia
Record Quarterly Sales, but Disappointing Results in China and the US
China Sales Up 0.7%, US Down 17%
New Client Sales in US Western Region Expected in Second Half
Cosmax, an original design manufacturer (ODM) specializing in cosmetics, has surpassed KRW 600 billion in quarterly sales for the first time in its history. This achievement was driven by the strong performance of mask pack and sun care product lines in the global market, with domestic and Southeast Asian subsidiaries leading the growth.
According to the Financial Supervisory Service's electronic disclosure system on August 11, Cosmax reported sales of KRW 623.6 billion in the second quarter, marking a 13% increase compared to the same period last year. Operating profit for the same period surged by 30.2% to KRW 60.8 billion. Both sales and operating profit posted double-digit growth rates. However, these figures fell short of market expectations, which estimated sales at KRW 648 billion and operating profit at KRW 63.6 billion.
On a half-year basis, consolidated sales reached KRW 1.2121 trillion and operating profit stood at KRW 112.2 billion, up 12.4% and 21.7%, respectively, from the same period last year.
By region, the domestic subsidiary led sales growth. In the second quarter, domestic subsidiary sales amounted to KRW 420.5 billion, a 20.8% increase year-on-year. Operating profit for the same period rose by 44.6% to KRW 49.9 billion. This marks the highest-ever performance for the domestic subsidiary.
Strong demand in the United States and Japan, along with increased shipments to Europe and the Middle East, are analyzed as key factors driving sales growth. In particular, the mask pack product line is estimated to have shown remarkable growth in the second quarter. Since the beginning of the year, hydrogel mask packs have gained explosive popularity in both domestic and international markets. In the first half of the year, sales of gel mask products more than tripled compared to the same period last year, with hydrogel mask packs growing by more than 20 times.
The sun care product line also grew by 50% year-on-year. The company’s focus on innovative technology to improve user experience led to the successful launch of diverse formulations such as sun serums, sun cushions, and sun sprays. Additionally, by securing optimal safety standards tailored to overseas markets, including the US OTC (over-the-counter) market, the domestic subsidiary’s growth was further bolstered.
In Southeast Asia (Indonesia and Thailand), second-quarter sales reached KRW 43.9 billion, up 23% year-on-year. Sales at the Thailand subsidiary (KRW 23.1 billion) soared by 124%, driving growth in the Southeast Asian market. The Thailand subsidiary’s strong performance was positively impacted by large-scale orders for sun care products. However, the Indonesia subsidiary saw sales (KRW 20.9 billion) decline by about 18% due to client adjustments resulting from joint sales activities with the Thailand subsidiary in the Southeast Asian region. The fact that some orders for the second quarter were delivered early in the first quarter at the request of local clients also affected sales.
A Cosmax representative stated, "In addition to our traditional best-selling items, the strong performance of mask pack and sun care product lines both domestically and internationally enabled us to achieve record-breaking results." The representative added, "In the second half of the year, we will further solidify our position as the world’s top cosmetics ODM by leveraging a diverse portfolio strategy based on product competitiveness and global scalability to satisfy consumers worldwide."
The China subsidiary posted consolidated sales of KRW 148.6 billion, a modest increase of 0.7% year-on-year. The Shanghai subsidiary recorded KRW 108.6 billion in sales, up 11% from the same period last year, while the Guangzhou subsidiary saw a 17% decline to KRW 41.1 billion. The Shanghai subsidiary benefited from increased export volumes and a rebound in performance from existing clients, resulting in higher sales. In contrast, the Guangzhou subsidiary experienced a decrease in sales due to reduced orders from existing clients and delays in acquiring new clients.
The US subsidiary reported second-quarter sales of KRW 30 billion, a 17% decrease from the second quarter of last year. This was due to declining sales from existing clients and delays in revenue generation from new clients. One-off costs related to the repayment of COVID-19 relief funds led to a net loss of KRW 20.4 billion, an increase of about KRW 10 billion compared to the second quarter of last year. However, Cosmax is focusing on high-growth categories such as sun care, body care, and eye patches, and expects improved results in the second half of the year as new clients in the western region contribute more to sales.
With sales in China and the US declining slightly, the domestic subsidiary’s share of total sales rose by 6 percentage points to 67%. The shares for China and the US decreased by 2 percentage points and 1 percentage point, respectively, to 24% and 5%. Thailand and Indonesia accounted for 4% and 3%, respectively.
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