South Korea’s top beauty brand maker AmorePacific Group bore the brutal scars from the ebb of Chinese visitors to Korea and state-sponsored boycott of Korean brands over Seoul’s installment of U.S. missile shield as its revenue primarily hinged on Chinese spending.

AmorePacific Group said in a regulatory filing on Monday that its consolidated operating profit for the third quarter ended September plunged 39.7 percent on year to 132.4 billion won ($117.8 million). Its sales decreased 14.2 percent to 1.4 trillion won over the same period while net profit declined 32.3 percent to 102.5 billion won. Against the previous quarter, its third-quarter performance slightly improved with operating profit inching up 1.5 percent and sales 0.4 percent. Net profit also grew 2.5 percent from the second quarter.

Its lackluster performance in the third quarter was largely due to a sharp fall in Chinese visitors to Korea following Beijing’s ban on group tours to Korea in protest of Seoul’s installation of a U.S. Terminal High Altitude Area Defense (THAAD) anti-missile battery. Slow sales translated into heavier fixed costs while the company’s investment continues to pursue long-term growth opportunities, weighing on operating profit for the quarter, AmorePacific said in a statement.

While its sales in Asian markets have slightly recovered, profits from its North American operations contracted because of the reorganization of its local sales network. Income from the European market shrank following the loss of the Lolita Lempicka fragrance license.

By unit, its key beauty product unit AmorePacific Corp. reported a 39.7 percent on-year plunge in operating profit to 101.1 billion won in the July-September period. Over the same period, sales narrowed 13.6 percent to 1.2 trillion won and net profit down 31.9 percent to 79.8 billion won.

Operating income of its budget beauty product brand Innisfree Corp. dropped 45 percent to 20.5 billion won in the third quarter from a year ago on sales of 141.2 billion won that declined 20 percent. Another budget brand Etude slipped into the red with an operating loss of 700 million won on a 19 percent fall in sales to 61.4 billion won.

But market watchers predicted the beauty giant would regain momentum in following months as the frayed relations between China and Korea are showing signs of recovery with the beginning of Chinese President Xi Jinping’s second term. Korea and China on Oct. 13 agreed to renew their $56 billion currency swap deal, and defense ministers of the two countries held their first talks in nearly two years on Oct. 24, the final day of China’s 19th National Congress where President Xi reinforced his power.

Following the conclusion of the congress, an unnamed Chinese travel agency in the northern Chinese province of Hebei posted a group tour deal to Korea on its website for the first time in nearly seven months. China’s biggest online travel site, ctrip.com, also reportedly contacted Hotel Lotte Co., one of Korea’s leading hotel and duty-free shop operators, to launch new Korea-bound tour programs, while a few Chinese budget carriers are preparing to resume flight services to Jeju Island, Korea’s popular resort island.

Shares of AmorePacific gained 3.65 percent to close at 326,500 won on Monday on expectations for improvement in Chinese business.

By Kang Da-young and Cho Jeehyun

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