-      Sales and Operating Profit decreased 6.6% yoy and 32.4% yoy, respectively

Oct 26, 2023 – In 3Q 2023, LG H&H Co., Ltd. (The Company) reported 1,746bn won in sales (-6.6% yoy), 128bn won in operating profit (-32.4% yoy).

The Company’s sales declined despite Refreshment’s continuous sales growth, due to the drop in sales of Beauty and HDB. The operating profit for the Company decreased due to the decline in Beauty’s profitability, which was negatively impacted by the slowing economy in China, as well as reorganization-related costs incurred from the domestic franchise business and the North America business.

[3Q 2023 Results by Business Segment]

▲Beauty business 3Q 2023 sales decreased 15.1% yoy to 670bn won and operating profit decreased 88.2% yoy to 8bn won.

Major channels reported decline in sales due to prolonged economic downturn in China, while domestic channels reported another quarter of sales growth. During the quarter, the DFS channel, which was negatively impacted by weak consumer sentiment and other factors, reported a double-digit decline in sales, whereas domestic H&B and online channels reported sales growth. The operating profit for Beauty declined due to sluggish demand across major channels, reorganization-related costs, and other factors. In terms of marketing, Beauty hosted ‘THE WHOO Cheongidan Art Fair in Shanghai’, an event to celebrate the renewal and global launch of ‘Cheongidan’, the best-selling line of ‘THE WHOO’. Furthermore, Beauty acquired ‘hince’, an indie color brand with a concept that emphasizes natural beauty and ‘mood’, in an effort to build up its MZ customer base through M&A.

▲HDB business 3Q 2023 sales decreased 2.9% yoy to 570bn won and operating profit decreased 16.8% yoy to 47bn won.

While the Daily Beauty reported solid results, high base effect of the raw material business persisted and led to a decline in overall HDB sales. Key brands ‘Euthymol’, ‘FiJi’, and ‘Elastine’ reported sales growth, along with ‘Physiogel’ that reported growth driven by the robust performance of ‘Dailimune Ampoule’. The operating profit for HDB declined due to persistent fixed cost pressure. During the quarter, Daily Beauty focused on fostering its key premium brands by launching new functional products, including ‘Dr. Groot Intensive Care TM Professional Shampoo’ and ‘Bamboo Salt Gum Care Whitening Toothpaste.’

▲Refreshment business 3Q 2023 sales increased 2.4% yoy to 506bn won and operating profit increased 11.3% yoy to 74bn won.

Refreshment reported sales growth driven by sustained demand for zero and energy drinks. ‘Coca-Cola Zero’ and ‘Monster Energy’ continued to grow on solid demand, while ‘Powerade Zero’, the first zero sugar concept sports drink introduced in the domestic market, also reported strong performance. The operating profit for Refreshment improved despite rising raw material prices due to boosted sales across brands and channels. In an effort to leverage the ongoing Healthy Pleasure trend to drive growth, Refreshment released new products, such as ‘Coca-Cola Zero Zero’, which contains zero-sugar and zero-caffeine. Additionally, Refreshment introduced various artwork of the Global Ambassador ‘New Jeans’ in collaboration with global music platform ‘COKE STUDIO.’