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Amorepacific Group Q2 2021 Earnings

Company 2021-07-28
  • Sales of KRW 1.3034 trillion, up 10.4% and operating profit up 188.5% to KRW 104.6 billion

Amorepacific Group reported sales of KRW 1.3034 trillion and an operating profit of KRW 104.6 billion in Q2 2021, up 10.4% and 188.5% respectively from Q2 2020.

In Q2 2021, Amorepacific Group focused on strengthening the competitiveness of its products, sustained its high growth in the online channel and as a result, made a good showing both in Korea and abroad. The COVID-19 Delta variant added to the confusion in the international market but international sales still managed to increase by nearly 10%, particularly in the online channel. Through enhanced product and channel mix, and efficient cost management, the operating profit has almost tripled compared to the same period last year. In total, sales in the cosmetics category was KRW 1.2206 trillion in Q2 2021.

The main affiliate, Amorepacific, recorded KRW 1.1767 trillion in sales, up 11.5% and KRW 91.2 billion in operating profit, up by 158.9% compared to the same period last year. In the Korean market, sales went up to KRW 741.8 billion (+13%) and operating profit increased to KRW 82.1 billion (+62.3%) and in the global market, sales rose to KRW 445.2 billion (+9.8%) and operating profit reached KRW 9.4 billion, marking a turnaround from loss.

In the Korean market, luxury brands and online channels fueled sales growth. Above all, sales in the Korean online channel showed over 40% increase. Improved channel mix also contributed to increased operating profit in the cosmetics category.

Luxury brands collaborated with leading platforms to improve digital marketing and thus were able to increase online sales. At the product portfolio level, Hera Black Cushion and Vitalbeautie Meta Green Shake Me were newly added. Premium brands also maintained strong growth in the online channel, mostly in leading digital platforms. New products such as IOPE Retinol Expert 0.2% and Cubeme Collagen Cube First / Plus were released to expand the lineup of products. Collaboration projects, including Laneige Neo Cushion Matte Phantom Violet with Galaxy Buds Pro, also took place. Daily beauty brands continued their double-digit sales growth in the online channel, and Ryo, mise en scène, Happy Bath and illiyoon introduced functional premium lineups for further growth.

In the global market, Amorepacific Group saw increased sales in most regions including Asia, North America, and Europe. Its growth in the online channel continued and combined with efficient cost management, profitability improved significantly.

In China, Sulwhasoo showed an outstanding performance with around 60% increase in sales through intensive marketing for Concentrated Ginseng Renewing. Overall, luxury brands recorded about 100% increase in online sales and drove the growth of the Chinese market. In the ASEAN region, Sulwhasoo grew over 60% with increasing demand for luxury anti-aging solutions, and both Laneige and innisfree posted a double-digit growth. Sales were up in the North American and European markets as well, despite the ongoing spread of COVID-19. In the North American market, innisfree entered Amazon and achieved an increase of online sales, while stable growth of Sulwhasoo in Sephora channel contributed to overall sales growth. In the European market, innisfree and Laneige made high sales in Sephora Europe. In addition, Laneige newly entered Cult Beauty, the UK beauty online retailer, and gained momentum for sales growth.

Major affiliates showed improved profitability through the growth of online sales and constant, efficient cost management.

With high sales of functional products including Black Tea Ampoule, innisfree enjoyed a continued increase in its online sales. It also improved its overall profit structure through offline channel restructuring, marking a turnaround. Aestura maintained high growth of both sales and operating profit with improved product mix and competitiveness of its star products including Atobarrier. Etude saw a decline in overall sales after closing of some of its offline shops but managed to reduce its deficit with increased online sales. eSpoir expanded digital platforms and this effort bore fruit with an uplift in online sales. However, its deficit slightly increased as the fixed costs for physical shops increased. Amos Professional scaled down its TR channel to focus more on the salon business, renewed Ayunche brand, and increased investment into digital transformation, and as a result, both sales and operating profit decreased. O'Sulloc reported over 50% increase in sales from last year, backed by the rise of its online sales and growth of Jeju Tea Museum. Improved channel mix and efficient management of its offline channels and their costs also contributed to its turnaround.

For the rest of this year, Amorepacific Group will continue to push ahead with its three business strategies: strong brand, digital transformation and business fundamentals innovation. It will develop engine products to deliver the unique values of the individual brands and respond to the demand of the times and accelerate collaboration with Korean and global digital platforms to boost its growth in the online channel. Furthermore, it will improve its business structure and fundamentals to improve profitability and cultivate dietary supplements and dermocosmetics as a new growth engine.

[Amorepacific Group] (Unit: KRW 100 million / Growth: YoY growth rate)

[Amorepacific Group]
Category Q2 2020 Q2 2021 Growth (YoY)
Sales 11,808 13,034 +10.4%
Operating Profit 362 1,046 +188.5%

[Earnings of the main affiliate, Amorepacific] (Unit: KRW 100 million / Growth: YoY growth rate)

[Earnings of the main affiliate, Amorepacific]
Category Total Korean Global
Sales 11,767 +11.5% 7,418 +13.0% 4,452 +9.8%
Operating Profit 912 +158.9% 821 +62.3% 94 Turnaround

[Earnings of other affiliates] (Unit: KRW 100 million / Growth: YoY growth rate)

[Earnings of other affiliates]
Affiliate innisfree Aestura Etude
Sales 879 -0.5% 338 +23.4% 262 -11.4%
Operating Profit 57 Turnaround 29 +29.5% -15 Deficit reduced
Affiliate eSpoir Amos Professional O'Sulloc
Sales 115 +5.9% 163 -5.1% 143 +50.7%
Operating Profit -8 Deficit increased 33 -16.3% 6 Turnaround

[Reference] Summary of H1 2021 Earnings (Unit: KRW 100 million / Growth: YoY growth rate)

[Reference] Summary of H1 2021 Earnings
Category H1 2020 H1 2021 Growth (YoY)
Sales 24,601 26,909 +9.4%
1,041 3,022 +190.2%
Amorepacific Sales 21,866 24,294 +11.1%
962 2,675 +178.1%

※ H1 2021 sales of Amorepacific Group in the cosmetics category: KRW 2.4989 trillion