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[Alpha Biz=(Chicago) Reporter Kim Jisun] LG Household & Health Care saw its cosmetics business profits fall due to sluggish sales in China, falling short of stock market expectations in the fourth quarter.
LG Household & Health Care announced on the 31st that its operating profit in the fourth quarter of last year was 54.7 billion won, down 57.6% from a year earlier. Sales fell 13.3 percent to 1.5672 trillion won during the same period, while net loss for the current term was 120.4 billion won, widening the deficit. Initially, securities firms expected LG Household & Health Care's fourth-quarter earnings to be 1.714 trillion won in sales and 59 billion won in operating profit. The performance was below expectations.
The drop in sales at duty-free shops and Chinese subsidiaries, which are high-margin channels, was largely due to a sharp drop in sales and operating profit in the cosmetics business. Sales in the cosmetics business fell 23.7 percent on-year to 663.5 billion won and operating profit fell 90.8 percent to 7.3 billion won in the fourth quarter. As demand in China decreased, duty-free shops and sales in China decreased by more than double digits. On top of that, operating profit plunged as the company withdrew its stores of non-mainstream brands in China and the U.S. subsidiary began restructuring. Sales of the household goods (HDB) business fell 4.5 percent on-year to 503 billion won and operating profit fell 3.7 percent to 18.2 billion won in the fourth quarter. The slowdown in the domestic economy has dampened consumption and reduced sales due to increased volatility in overseas businesses. Sales of the beverage (Refreshment) business fell 2.6 percent on-year to 400.7 billion won and operating profit fell 5.3 percent to 29.2 billion won.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
