TV CF
VITAL GARDEN
Date 2023.10.26
- 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]
¡ãBeauty 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.
¡ãHDB 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.¡¯
¡ãRefreshment 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.¡¯