April 25, 2024

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[THE INVESTOR] South Korean cosmetics giant AmorePacific Group said Tuesday that its third-quarter operating profit rose 16.7 percent to 219.7 billion won ($192.5 million), led by the strong growth of its cosmetics businesses abroad.

The group’s revenue also rose 22.9 percent on-year to reach 1.65 trillion won in the July-September period, according to the company’s regulatory filing.

However, its net profit in the third quarter dropped 0.4 percent to 151.4 billion won, due to losses sustained by its biggest subsidiary AmorePacific.

AmorePacific, which owns some 20 cosmetics and household goods brands, initiated a major recall of its flagship Median toothpaste last month after the brand’s products were found to have contained small quantities of harmful chemical agents CMIT and MIT.
 

AmorePacific headquarters

The costs of the recall took a toll on AmorePacific’s third-quarter net profit, which declined 17.7 percent on-year to 117.1 billion won to mark the firm’s first quarterly decline in three years.

“Though our main cosmetics business was successful, the financial costs of recalling Median toothpaste products dealt a blow to AmorePacific’s third-quarter profit,” said an AmorePacific spokesperson.

“Since the recall has been mostly finished now, it is unlikely to significantly impact our fourth-quarter performance,” she added.

Despite losses from its household goods business, AmorePacific’s cosmetics business remained upbeat in the third quarter, the company said.

Its operating profit during the July-September period rose 2 percent on-year to 167.5 billion won while revenue rose 23 percent on-year to 1.4 trillion won.

The growth was led by the success of AmorePacific’s top five cosmetics brands — Sulwhasoo, Laneige, Mamonde, Innistfree and Etude — in overseas markets, mainly China.

AmorePacific’s overseas revenue rose 27 percent on-year to 407 billion won in the third quarter, while operating profit jumped 23 percent to 47.2 billion won during the period. Revenue from Asian markets came in at 376.2 billion won, up 29 percent on-year.

The Korean cosmetics giant’s domestic revenue rose 22 percent to 1.7 trillion won while operating profit rose 4 percent to 136.6 billion won in the third quarter, led by the successful marketing of its luxury brands Sulwhasoo and Hera.

By brand, Innisfree saw its revenue increase 29 percent to 176.9 billion won and operating profit rise 56 percent to 37.2 billion won during the period. The growth was led by the popularity of the naturalist cosmetics brand’s signature products as well as new launches, AmorePacific said.

Etude, a budget makeup brand targeting teens, saw its revenue rise 34 percent to 75.7 billion won on-year in the third quarter. It raised 6.9 billion won in operating profit, swinging into the black from an operating loss of 10 billion won posted during the same quarter last year.

For the past year, Etude has been pulling its stores from E-mart discount store outlets while strengthening its online-to-offline services to better service its customers.

By Sohn Ji-young/The Korea Herald (jys@heraldcorp.com)