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Amorepacific Group Summary of 2017 Results

Company 2018-01-31

Amorepacific Group’s 2017 Sales KRW 6.0291 Trillion, Operating Profit KRW 731.5 Billion - 4Q 2017 Sales KRW 1.3421 Trillion, Operating profit KRW 90.3 billion

Amorepacific Group reported sales of KRW 6.0291 trillion for 2017, and operating profit of KRW 731.5 billion. Sales and operating profits of major beauty subsidiaries declined due to fewer tourists visiting Korea; sales went down by 10.0% year on year, and operating profit went down by 32.4% year on year.

Amorepacific Group will be accelerating the expansion of its presence in overseas markets in a bid to improve its performance for 2018. Etude will open in Kuwait in February and again in Dubai the following month. LANEIGE will open in Sephora in the Australian market in March. Mamonde will also open in ULTA, a US-based beauty specialty store, during the first quarter. Hera will enter the Singaporean market in April.

Amorepacific Group will also focus on the development of innovative global products, presenting an enhanced customer experience, and improving its digital infrastructure to lay groundwork for sustainable growth.

[Amorepacific Group 2017 Results] (Unit: KRW100 million)
Amorepacific Group 2017 Results
(KRW100 million/%) 2016 Accumulated 2017 Accumulated Q4 2016 Q4 2017
Amount Amount YoY Change Amount Amount YoY Change
Sales 66,976 60,291 -10.0% 15,643 13,421 -14.2%
Operating Profit 10,828 7,315 -32.4% 1,344 903 -32.8%
Net Income 8,115 4,895 -39.7% 880 209 -76.2%
[2017 Sales and Operating Profit by Key Cosmetics Subsidiaries] (Unit: KRW100 million / Growth: YoY)
2017 Sales and Operating Profit by Key Cosmetics Subsidiaries
Subsidiary Amorepacific Growth Innisfree Growth Etude Growth
Sales 51,238 -9% 6,420 -16% 2,591 -18%
Operating Profit 5,964 -30% 1,079 -45% 42 -86%
2017 Sales and Operating Profit by Key Cosmetics Subsidiaries
Subsidiary Espoir Growth Aestura Growth Amos Professional Growth
Sales 432 14% 1,141 10% 834 5%
Operating Profit -18 Deficit continues 34 59% 175 9%

Results of Major Subsidiaries in 2017

Amorepacific Corporation : Sales at KRW 5.1238 trillion (-9%), and operating profit at KRW 596.4 billion (-30%)

Amorepacific Corporation, a key subsidiary, saw a decreased growth in sales and operating profit due to declining number of Chinese tourists and business slowdown in domestic duty-free channels and retail shops located in tourist areas. Domestic business sales decreased by 16% year on year to KRW 3.3474 trillion, while overseas business sales grew by 7% to KRW 1.8205 trillion.

  • Amorepacific’ domestic business : Sales at KRW 3.3474 trillion (-16%), and operating profit at KRW 417.7 trillion (-38%)

    Amorepacific’s domestic business performance was sluggish in duty-free channels and main tourist districts due to a reduction in the number of tourists visiting Korea. It also saw heightened fixed costs due to sluggish sales and continued investment aimed at boosting medium-to-long-term growth. This further contributed to the reduction in operating profit. To increase domestic business competitiveness, Amorepacific continued to launch new products and reinforced its distribution competitiveness by boosting its directly managed malls and entering the multi-brand channel CHICOR.

    (New products in 2017: ‘Sulwhasoo First Care Activating Mask’, ‘Sulwhasoo Timetreasure Renovating Eye Serum’, ‘Hera Black Cushion’, ‘primera Soothing Sensitive Line’, ‘Iope Derma Repair Line’, etc.)

  • Amorepacific’ overseas sales : Sales at KRW 1.8205 trillion (+7%) and operating profit at KRW 194.2 billion (-8%)

    Overseas, sales in Asia increased by 10% year on year to KRW 1.732 trillion, while its North American sales decreased by 1% to KRW 52.9 billion. Sales in Europe also experienced a decline of 47% to KRW 35.7 billion due to the termination of Lolita Lempicka brand license. For business in Asia, Amorepacific opened new stores of its top five global brands. In North America, the launch of LANEIGE in Sephora and the launch of innisfree in the market reinforced grounds for growth. At the same time, new foundations have been laid for the company’s European business as Sulwhasoo began to penetrate French department stores, thus, opening the door for further expansion into the European skincare market.

Innisfree : Sales at KRW 642 billion (-16%), and operating profit at KRW 107.9 billion (-45%)

Sales of innisfree products in duty-free channels and stores in tourist districts were sluggish due to a decrease in tourists. Despite the worsening business conditions, innisfree continued to provide differentiated customer experiences by increasing the number of Green Lounges and VR zones where customers can experience the brand and its products. Product competitiveness has also been bolstered through the fostering of representative products and launching of new products.

(New products in 2017: ‘bija cica balm‘, ‘real fit lipstick‘, ‘my palette’, etc.)

Etude : Sales at KRW 259.1 billion (-18%), operating profit at KRW 4.2 billion (-86%)

Etude sales in duty-free channels and roadshops in tourist districts were also sluggish. Etude has strengthened its product competitiveness with the introduction of new products and by improving in-store the customer experience, which include the opening of new flagship stores and the launch of personalized color service ‘Color Factory’.

(New products in 2017: ‘Any Cushion All Day Perfect’, ‘Soonjung Line’, ‘FIX&FIX Primer’, ’Color In Liquid Lips’, ‘PLAY COLOR EYES #WINE PARTY’, etc.)

Espoir : Sales at KRW 43.2 billion (-14%), operating loss continued

Espoir has seen an increase in sales in response to the expansion online and in duty-free. The brand reinforced its image as a professional makeup brand by introducing differentiated makeup looks and new products.

(New products in 2017: ‘PRO ATELIER Collection’, ’coralude Collection’, etc.)

Aestura : Sales at KRW 114.1 billion (+10%), operating profit at KRW 3.4 billion (+59%)

Sales increased for Aestura with robust sales of medical beauty brands, ATOBARRIER and REGEDERMRX, and inner beauty products. Efficient cost management led to improvement in profitability.

Amos Professional : Sales at KRW 83.4 billion (+5%), operating profit at KRW 17.5 billion (+9%)

Sales and operating profit grew for Amos Professional due to the increased sales of its representative products, such as ‘Feel the Green Tea Shampoo’ and ‘True Sync Hairdye‘.