|KRW bn/%||1Q 2014||1Q 2015|
1)Cosmetics: AMOREPACIFIC, ETUDE, innisfree, Amos Professional, eSpoir, etc.
2)Non-cosmetics: Aestura, Pacific Glas, Pacific Package, Jangwon Industry, etc.
AMOREPACIFIC Group reported sales of 1,443.8 billion KRW for the first quarter of 2015, up 26.7% from the same period last year, and operating profit of 320.7 billion KRW, up 49.9% from the same period last year. The group achieved solid growth both in sales and operating profit, driven by the continuous growth of its cosmetics subsidiaries including AMOREPACIFIC.
■ Results of Major Subsidiaries in 1Q 2015
[Cosmetics Subsidiaries] Sales at 1,382.3 billion KRW (+27.7%) and operating profit at 321.3 billion KRW (+50.2%)
1) AMOREPACIFIC, Sales at 1,204.4 billion KRW (+29.2%), operating profit at 278 billion KRW (+58.2%)
AMOREPACIFIC Corporation posted a solid sales growth of 29.2% year-over-year and reported 1,204.4 billion KRW in sales as a result of compelling brand power that led to domestic market leadership and overseas business growth. The company’s major businesses reported sales results as follows: ①Domestic Cosmetics Business at 796.2 billion KRW (+31%), ② Mass Business and Sulloc Business at 138.8 billion KRW (+5.3%), ③ Overseas Business at 269.3 billion KRW (+40%).
① Domestic Cosmetics Business achieved solid growth driven by the increase in sales of all major distribution channels such as door-to-door, department stores, duty-free, Aritaum, and digital.
In Luxury Business (Sulwhasoo, HERA, Primera etc. / Door-to-door, department stores, duty-free, etc.), the sales of door-to-door channel increased through business model improvement and strengthening counselors’ sales capabilities. Sales of main products including luxury skincare and key make-up products increased.
The company strengthened leadership in domestic department stores as the sales from its major brands, Sulwhasoo, Hera, and Primera increased. In particular, Sulwhasoo maintained its number one position as a best-selling brand in department stores in terms of sales due to the popularity of its high-end functional skincare products including the Timetreasure line. Duty-free channel saw increased sales as purchases from Chinese tourists and Korean consumers continued to grow.
In Premium Business (IOPE, LANEIGE, Mamonde etc. / Aritaum, digital, etc.), Aritaum reported solid performance through the new product launches and product upgrades. In particular, the sales of best-selling products like IOPE Air Cushion and LANEIGE Original Essence drove growth. In digital channels, increased sales in home shopping and e-commerce also helped achieve high performance.
② In Mass Business,sales growth of premium products helped improve profitability and increase sales. Sulloc Division continued to focus on improving brand awareness, and achieved qualitative growth through boosting its product competitiveness.
Mass Cosmetics (Ryo, Mise en Scène, Happy Bath, etc. / Discount stores, etc.) saw growth in sales of premium products, such as functional hair care products and dental calculus care products. The division is actively responding to the new customer needs with upgraded perfume lines in hair and body categories.
Sulloc Division is showing continuous growth (8.4%) by upgrading the premium brand category and store environments.
③ Overseas Business expanded in emerging markets including China and ASEAN, and achieved high levels of growth in sales.
In emerging markets (China, other Asia, etc.), the company’s sales increased 50.6% to 241.2 billion KRW. China continued to report high growth in sales through channel diversification and enhancing brand awareness. LANEIGE, which showed increased sales of its best-selling products like BB Cushion and Water Sleeping Mask, as well as Sulwhasoo and innisfree drove growth with compelling brand power. In other parts of Asia (excluding China and Japan), the company reported solid growth with increased brand awareness and new store openings. Increased sales of LANEIGE’s key products in all distribution channels in ASEAN region drove high levels of growth, while Sulwhasoo and innisfree also achieved qualitative growth based on new store openings.
In developed markets (France, US, Japan, etc.), sales decreased 7.7% to 38.9 billion KRW. The US market continued to show improved profitability and increased sales across all distribution channels. AMOREPACIFIC and Sulwhasoo achieved sales growth in all channels including department stores, Sephora, and online. LANEIGE showed growth in sales at Target and contributed to improved profitability. In France, the company reorganized channels and achieved cost-efficiency to improve profitability despite unfavorable market conditions such as depression in domestic demands. In Japan, sales of major brands including ETUDE and IOPE are increasing, and the company is focusing on making brands more attractive through strengthened marketing activities in digital channels.
2) innisfree, sales at 142.6 billion KRW (+35%), operating profit at 35.4 billion KRW (+46%)
innisfree achieved solid growth based on the increased sales of its best-selling products (Green Tea Seed Serum, Jeju Volcanic, It’s Real Mask Pack) and successful new product launches (Jeju Sparkling Mineral lines and Cauliflower Mushroom Vital lines). In addition, innisfree launched various brand campaigns and customer promotions that helped achieve significant growth in both domestic and overseas new-customer inflow. In overseas markets, increased brand power enabled growth in export and duty-free.
3) ETUDE, sales at 71.6 billion KRW (-2%), operating profit at 3.5 billion KRW (-51%)
ETUDE experienced decrease in both sales and operating profit in 1Q 2015 as the company continues to restructure channels for strengthened brand power. However, the company has prepared grounds to improve performance of the brand by expanding investment in marketing activities for new product launches (Blur Cream and Liquid Lips) and product upgrades.
4) Amos Professional, sales at 17.7 billion KRW (+24%), operating profit at 4.8 billion KRW (+15%)
Amos Professional experienced solid growth in sales due to increased sales of major products for hair thickening, cleansing, and styling.
5) eSpoir, sales at 7.1 billion KRW (+25%), operating profit at -1.2 billion KRW (decreased deficit)
The sales of eSpoir increased 25% supported by the high level growth through new store openings and duty-free. eSpoir is focusing on positioning itself as a professional make-up brand.
[Non-cosmetics Subsidiary] Sales at 61.5 billion KRW (+7.4%), operating profit at -0.6 billion KRW (turned to deficit)
1) Aestura (former Pacific Pharma), sales at 17.7 billion KRW (-4%), operating profit at -1.3 billion KRW (-1%)
Sales and operating profit of Aestura (former Pacific Pharma) decreased due to restructuring and selling of its pharmaceutical business division. However, its medical beauty business, the division that the company is focusing on after restructuring, has achieved solid two-digit growth with its brands such as Cleviel, Artefill and ATO Barrier.