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LG Household & Health Care reports record-high annual result
Sales 6.3tr won, Operating Profit 930bn won
Jan 23, 2018 – In FY 2017, LG Household & Health Care, Ltd. (CEO: Suk Cha) recorded sales
of 6.3tr won (+2.9% yoy), operating profit of 930bn won (+5.6% yoy), and net profit of 619bn won(+6.8%).
Overall market growth faced headwinds due to a sharp decline of inbound Chinese traffic since March and general concerns over safety of chemical products. However, all three divisions delivered higher growth than market; (1) Beautiful posted continuous growth driven by focus on luxury cosmetics in domestic and overseas market, (2) Healthy achieved gains in product safety and premiumization, (3) Refreshing expanded its categories through new product launches.
Both sales and operating profit have risen year to year for 13 consecutive years and resulted in record-high annual results. Despite complications caused by THAAD deployment, Beautiful achieved strong results from differentiated strategy with luxury cosmetics focus, and solid growth from overseas including China, demonstrating resilience despite external factors.
Debt-to equity ratio improved by16.8%p yoy from 71.8% to 55.0% due to increased cash flow from profit growth.
[FY 2017 Results by Business]
Beautiful sales increased 4.9% yoy to 3.3tr won, and operating profit increased 10.0% yoy to 636bn won. Operating margin improved by 0.9%p from 18.3% to 19.2% due to strong growth in luxury cosmetics.
Strategically focused luxury cosmetics led overall business growth. ‘Whoo’ became one of Asia’s top cosmetics brands as its global sales surpassed 1tr won for two consecutive years, reaching 1.4tr won in 2017. Also, ‘su:m’ global sales surpassed 380bn won, strengthening its position as the second major brand. China cosmetics sales increased 34% yoy from continuous demand growth from on-shore consumers.
Healthy sales decreased 0.9% yoy to 1.6tr won, and operating profit decreased 10.6% yoy to 167bn won. In 2016, Healthy sales and operating profit recorded high growth buoyed by a strong reputation for product safety amidst consumer concerns over use of chemical products heightened from humidifier disinfectant and toothpaste scandals. Due to a high base and a sharp decline of Chinese inbound traffic, sales decreased slightly by 0.9% yoy in 2017. However, Healthy strengthened its #1 position in the market through share expansion.
Refreshing sales increased 2.6% yoy to 1.4 tr won, operating profit increased 9.7% yoy to 127bn won, operating profit margin improved 0.6%p yoy to 9.2%. Despite slow domestic economy, market share expanded 0.7%p yoy to 29.7% from solid sales growth. Carbonated drinks sales delivered 2% yoy growth driven by continuous growth from ‘Coca-Cola’, ‘Sprite’, and ‘Monster Energy’. Non-carbonated drinks sales also delivered 6% yoy growth as ‘Georgia’, ‘Toreta’, ‘Crushed Pear Juice’ and ‘Guronsan’ received favorable response from consumers.