While the global economy faces a downturn, domestic beauty industry leaders like Amorepacific and LG Household & Health Care are grappling with challenging times. In stark contrast, Kolmar is flourishing on its own. Amid the repercussions of the economic downturn, the consumer market has experienced polarization, causing a decline in preference for premium brand products. Thanks to the flourishing era of small independent beauty brands that rely on “value for money,” Korean cosmetics research and manufacturing specialist Kolmar Korea has surprisingly found itself in a “golden age.”
According to financial information provider FnGuide on Oct. 30, Kolmar Korea is expected to report third-quarter results for this year with revenue of 551.2 billion won (US$408.3 million) and an operating profit of 41.3 billion won. Both revenue and operating profit are set to increase by 16.4 percent and 128.2 percent, respectively, compared to the previous year. In addition to these positive results, Kolmar Korea is projected to achieve its highest performance ever since its establishment, with expected full-year revenue of 2.2 trillion won, an 18.1 percent increase, and an operating profit of 155.1 billion won, a 111.6 percent increase compared to the previous year.
Kolmar Korea currently engages in three core business sectors, which are cosmetics manufacturing, pharmaceuticals, and health supplement foods. The company’s cosmetic sales reached 456.1 billion won, marking an 18.4 percent increase compared to the previous year, and its net profit surged by 42.9 percent, reaching 34.3 billion won.
Even in the midst of the global economic downturn affecting consumer markets, Kolmar Korea’s cosmetics division is showing strength due to an increasing number of consumers seeking “indie brands” known for their high-quality offerings relative to price. In contrast, companies like LG Household & Health Care and Amorepacific, which have positioned themselves with a “premium” image in the Chinese market, are facing a dim outlook for their third-quarter performance this year.
Kolmar Korea plays a pivotal role as the “production base” for cost-effective indie brand cosmetics, capturing a significant portion of the beauty industry’s revenue during this economic downturn. Out of roughly 30,000 domestic cosmetic companies, only around 10 percent have their own production facilities. The remaining 90 percent of cosmetic companies have no choice but to outsource their production to manufacturing companies like Kolmar Korea, which operate as original design manufacturer (ODM) and original equipment manufacturer (OEM) for cosmetics.
Indeed, the operating rate of Kolmar Korea’s cosmetics factory has seen a notable increase. From 78.6 percent in 2021, it rose to 82.3 percent in 2022 and surged to 87.7 percent in the first half of this year. Additionally, the operating profit margin, which had dropped to 1.80 percent in the fourth quarter of last year, rebounded to 2.47 percent in the first quarter of this year and further to 9.28 percent in the second quarter.