Continuous Quarterly Growth for 13 Years
LG Household & Health Care announced on July 24 that in the second quarter of 2018, the company delivered sales of 1.7 trillion won, up 11.1% year on year, operating profit of 267 billion won, a 15.1% increase from a year ago, and net profit of 187 billion won, up 11.4% on year.
In the first half of 2018, the company recorded 3.3 trillion won in total sales (+8.7% yoy), 551 billion won in operating profit (+12.0% yoy), and 384 billion won in net profit (+10.1%).
Despite sluggish domestic demand and slow recovery in the number of inbound tourists, the company delivered the highest second quarter and first half result of all times.
The company posted sales growth for 51 quarters in a row since the third quarter of 2005, and operating profit has increased for 53 consecutive quarters since the first quarter of 2005, delivering continuous growth for more than 13 years.
The company’s debt-to-equity ratio improved by 11.2% points yoy to 48.4% due to increased cash flow from profit growth.
In the second quarter of this year, cosmetics sales increased 23.2% year on year to 953 billion won, and operating profit increased 30.1% to 194 billion won.
Although the number of new entrants into domestic and Chinese cosmetics market is increasing massively, cosmetics delivered strong growth fueled by the success of luxury brands with well established brand propositions.
Since sales surpassed 1 trillion won for the first time in 2016, “Whoo” set a new record again as its sales surpassed 1 trillion won in July and the length of time to reach the level shortened every year. To meet rising market demand for luxury cosmetics, the company’s luxury brands including “su:m” and “OHUI” strengthened competitiveness by further focusing on differentiated high-end lines.
In the first half of 2018, cosmetics sales increased 17.4% from a year ago to 1.9 trillion won, and operating profit increased 24.7% to 406 billion won.
In the second quarter, household goods sales decreased 6% to 337 billion won, and operating profit decreased 27.7% to 27 billion won. The company says it continued to simplify premium-focused business structure in order to enhance core capabilities for mid-to-long term growth rather than focusing on short term growth. While sales and operating profit decreased due to reduction of channel inventory and SKU optimization, business structure has become less complex and more transparent.
In the first half of 2018, household goods sales decreased 5.2% on year to 732 billion won, and operating profit decreased 25.4% to 69 billion won.
Beverage sales increased 1.8% year on year to 362 billion won in the second quarter, and operating profit increased 1.3% to 46 billion won. Domestic market share expanded 0.9% point to 30.5%. Carbonated drinks sales increased 3% from fast growth of Coca-Cola, Sprite, and Monster Energy. Non-carbonated drinks sales increased 2% as Geogia, Crushed Pear Juice, and Toreta delivered high growth.
In the first half of 2018, beverage sales increased 3.6% to 679 billion won, and operating profit increased 2.7% to 75 billion won.