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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] LG Household & Health Care has launched a broad restructuring effort after reporting weak earnings last year, as both its core beauty business and once-stable beverage division showed signs of slowing.
According to industry sources on March 4, the company posted 6.36 trillion won ($4.7 billion) in revenue in 2024, down 6.7 percent year-on-year, while operating profit plunged 62.8 percent to 170.7 billion won.
The downturn was particularly evident in the Refresh division, which oversees the beverage business. The unit recorded an operating loss of 9.9 billion won in the fourth quarter, marking the first quarterly loss since LG Household & Health Care acquired Coca-Cola Beverage in 2007.
Sales in the division also declined to 383.5 billion won, down 6.7 percent from a year earlier, as the carbonated drink market increasingly shifts toward zero-sugar products, slowing demand for traditional cola beverages.
As earnings pressure intensified, the company moved to improve its cost structure through workforce reductions.
Its subsidiary Coca-Cola Beverage implemented a voluntary retirement program between late November and early December last year, targeting employees in sales, logistics and staff departments born before 1980. The inclusion of staff divisions such as HR and strategic planning marked the first time the program expanded beyond field departments.
The restructuring has not been limited to beverages. LG Household & Health Care also carried out voluntary retirement in its beauty division, citing the expansion of online channels and the consolidation of offline stores such as department stores and duty-free shops.
However, industry observers say workforce reductions alone may not be enough to restore profitability.
The K-beauty market has increasingly shifted toward smaller indie brands that leverage online platforms and global distribution networks with faster product development and marketing strategies. In contrast, LG Household & Health Care has been criticized for relying heavily on large legacy brands and a more conservative operating structure.
Analysts say the company’s long-term turnaround will depend on its ability to launch innovative products and rebuild brand competitiveness, rather than relying solely on cost-cutting measures.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
