In 2Q 2023, LG H&H Co., Ltd. (The Company) reported 1.8tr won in sales (-3.0% yoy), 158bn won in operating profit (-27.1% yoy).
The Company sales decreased mainly due to Beauty’s 8% yoy decline, while HDB and Refreshment sales grew slightly yoy. Operating profit for the Company decreased due to persistent cost pressure and expenses related to reorganization and efficiency of domestic and US business.
■ 2Q 2023 Results by Business Segment
▲ Beauty business 2Q 2023 sales decreased 8.5% yoy to 781bn won and operating profit decreased 24.9% yoy to 70bn won.
Despite positive growth in domestic channels, Beauty sales decreased due to China’s lagging consumption recovery.
Whereas domestic channels, such as department stores, H&B and etc., reported positive sales growth, DFS channel reported double-digit drop in sales due to high base of 2Q 2022 and China onshore business reported single-digit decline in sales.
Operating profit for Beauty decreased due to slowing topline growth and reorganization related costs. Beauty enhanced brand value with new product launches and major Line renewals.
New product launches included ‘O HUI’ Ultimate Fit Jean Cushion and ‘Glint’ highlighter ‘Peach Moon’. ‘Whoo’ introduced Hwanyu Line renewal and ‘Sum37°’ presented ‘Water-full’ Line renewal.
▲ HDB business 2Q 2023 sales increased 0.5% yoy to 546bn won and operating profit decreased 53.6% yoy to 28bn won.
HDB sales slightly increased due to Daily Beauty and online channel growth. Daily Beauty growth was driven by strong performance of Premium brand ‘Physiogel’ and ‘Euthymol’.
Online channel sales grew as HDB enriched its live commerce contents in collaboration with various e-commerce platforms. Operating profit, however, decreased due to persistent cost headwinds and reorganization related costs.
HDB augmented product portfolio with new launches including ‘Physiogel’ CICA Line & Suncare Lineup for the summer season and ‘Veilment’, ‘Dr. Groot’, & ‘Himalayan Pink Salt’ Cooling Lineup.
▲ Refreshment business 2Q 2023 sales increased 3.2% yoy to 481bn won and operating profit decreased 5.5% yoy to 60bn won.
Refreshment sales grew due to strong demand for zero sugar and energy drinks. While ‘Coca-Cola Zero’, ‘Monster Energy’ and ‘Powerade’ sales continued to grow, operating profit decreased due to persistent cost related headwinds.
Refreshment launched unique marketing campaigns for new zero sugar beverages. ‘Coca-Cola’ released commercial song ‘Zero’ with NewJeans and introduced ‘Coca-Cola Zero Lemon’ and ‘Coca-Cola x NewJeans Special Package’.
Also, Refreshment presented ‘Crush Pear Cider’, a refreshing carbonated pear flavored beverage, to expand on its sugar zero portfolio.