Jan 30, 2023 – In 4Q 2022, LG H&H (The Company), Ltd. reported 1.8tr won in sales (-10.6% yoy), 129bn won in operating profit (-46.5% yoy).

Business environment for 4Q continued to be very challenging as consumption was sluggish in both domestic and global market due to worldwide economic recession. Although Beauty business suffered from sales loss across travel retail and China onshore business, it achieved meaningful results during China Single’s Day event in terms of online channel diversification. HDB and Refreshment reported another quarter of growth with new product launches and strong sales performances of premium brands.

Meanwhile, operating profit declined as overall sales decreased and cost pressures increased due to intensifying competition and high raw material prices.

In FY 2022, sales decreased 11.2% yoy to 7.2tr won and operating profit decreased 44.9% yoy to 711bn won.

[4Q & FY 2022 Results by Business]

▲Beauty business 4Q 2022 sales decreased 23.7% yoy to 870bn won and operating profit decreased 57.7% yoy to 79bn won.

During China Single’s Day event this year, Beauty achieved meaningful results in terms of strategic online channel diversification. Based on strong brand awareness, ‘Whoo’ entered and topped the rankings on new fast-growing e-commerce platforms, such as ‘TikTok’ and ‘Kuaishou’. However, as the unstable market conditions continued through out 4Q, Beauty overall performance, including China onshore business and travel retail, was greatly affected by the rapid spread of COVID-19 cases in China due to the changes in the zero-COVID policy. Meanwhile, in the domestic market various attempts were made to enrich brand assets for long-term performance even under an uncertain macro environment. ‘O HUI’ presented ‘The First Maison’ VR exhibition, which captures the identity of ‘The First’ line, and ‘Belif’ ran an offline pop-up event that incorporated ‘Belif Universe’, the brand’s identity and story, to communicate with consumers across channels.

FY 2022 sales decreased 27.7% yoy to 3.2tr won and operating profit decreased 64.7% yoy to 309bn won.

▲HDB business 4Q 2022 sales increased 5.0% yoy to 527bn won and operating profit decreased 6.7% yoy to 19bn won.

Unfavorable operating environment persisted for HDB as the rise in inflation slowed consumption and consumers became more price sensitive. Improving profitability was difficult due to high price levels, high exchange rates and high wages, but HDB continued to invest in premium brand marketing. In particular, ‘Dr. Groot’ and ‘Physiogel’ continued to strengthen brand loyalty by increasing consumer engagement through digital media channel activation. HDB production portfolio expansion is also in progress. ‘Physiogel’, spotted new business opportunities in the beauty category following the successful launch of ‘Physiogel Dailimune Defense Cushion’ that reported solid performance from home shopping channels at year end. Furthermore, ‘Euthymol’ introduced teeth-whitening products, including whitening toothpaste that is expected to increase in demand once indoor mask mandate is lifted.

FY 2022 sales increased 7.4% yoy to 2.2tr won and operating profit decreased 9.1% yoy to 190bn won.

▲Refreshment business 4Q 2022 sales increased 7.8% yoy to 411bn won and operating profit decreased 7.7% yoy to 31bn won.

4Q is normally a slow season for beverage business, sales grew despite the high base of last year as sales of carbonated drinks increased at convenience stores and delivery channels fueled by 2022 Qatar World Cup event. Profitability, however, decreased as cost headwinds persisted due to high raw material costs. ‘Coca-Cola World Cup Special Package’, ‘Sprite Zero X Black Panther’, and ‘Powerade World Cup Package’ were introduced as limited editions to build brand intimacy and enhance customer touchpoints. ‘Monster Energy’ sales grew 29.0% due to strong demand for energy drinks that contain stimulants to stay awake for late-night World Cup matches.

FY 2022 sales increased 10.8% yoy to 1.8tr won and operating profit increased 3.7% yoy to 212bn won.