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Magic of LG Household & Health Care CEO Cha Seok-yong Continuing
A 14-year-long Winning Streak
Magic of LG Household & Health Care CEO Cha Seok-yong Continuing
  • By Choi Moon-hee
  • October 25, 2019, 10:02
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LG Household & Health Care renewed its best business performance in the third quarter of 2019.  

Even a global economic slowdown and slumps in the Chinese and Korean markets could not stop the magic of LG Household & Health Care vice chairman Cha Seok-yong. Under Cha, the company has renewed its best business performances for 14 years in a row, setting a new record in Korean beauty care industry history.

In the third quarter of this year, LG Household & Health Care posted 1.97 trillion won in sales, up 13.1 percent from a year before. Its operating profit also swelled 12.4 percent to 311.8 billion won. This means that the Korean beauty care giant posted operating profits of more than 300 billion won for three consecutive quarters. Its total sales in the first three quarters of this year reached 5,672.1 billion won, up 12.3 percent on year, and its operating profits jumped 12.9 percent to 935.4 billion won. Both of its quarterly sales and operating profits hit new record highs.

The third-quarter sales and profit growth was led by the luxury cosmetics brands Whoo, SU:M, and OHUI in the Chinese market. The company has a brighter future as its synergies with New Avon of the United States will be generated beginning the fourth quarter of this year. LG Household & Health Care completed its takeover of U.S. door-to-door sales company New Avon in August. However, New Avon's sales dropped in the second quarter, so it remains to be seen whether Cha’s magic will work again this time.

By business division, cosmetics drove sales growth. Its Cosmetics Business Division posted 1,160.8 billion won in sales and 211.9 billion won in operating profit, up 21.6 percent and 15.1 percent on year, respectively. Sales of household goods such as toothpaste and shampoos also grew by 3.0 percent to 401.1 billion won, generating 45.1 billion won in operating profit, a year on year increase of 5.7 percent.

The Beverage Business Division, which newly introduced the Georgia Craft, also posted 402.9 billion in sales and 54.9 billion won in operating profit, up 2.4 percent and 7.9 percent from a year earlier, respectively.

The biggest driving force behind LG Household & Health Care's strong business performances is its luxury cosmetics brands. In response to the trend towards luxury cosmetics, the company launched various luxury lineups such as Whoo, SU:M and OHUI. Even during China’s retaliation against Korean companies and goods for the Korean government’s deployment of the U.S. Terminal High Altitude Area Defense (THAAD) System in South Korea, LG Household & Health Care did not falter in China and boosted its brand image by holding the Whoo Royal Party in Shanghai, China. As Whoo, the leading player among the luxury brands, steadily performed well in the high-end cosmetics market, the ultra-high price line of SU:M and O HUI also grew more than 70 percent, leading the growth of LG Household & Health Care. The Summa and The First product lines each grew 83 percent and 74 percent in the third fourth quarter.

New Avon, a U.S. door-to-door sales company acquired by LG Household & Health Care in August, saw its sales drop 7 percent in the second quarter of this year. A concern has been raised that New Avon may put the brakes on LG Household & Health Care’s winning streak. The company's earnings in the third quarter included New Avon's September business performances. "New Avon will help us expand our markets and reduce our dependence on China," a company official said. "New Avon will lay the foundation for our entry into the American market."