South Korea’s LG Household & Health Care Ltd. finishes the year on buoyant note with best-ever performance in operating income and sales thanks to staggering success of its cosmetics business.

Its operating profit up to September reached 703 billion won ($582.4 million), topping full 2015 profit of 684 billion won. Full income for 2016 is estimated at 850 billion won. Sales up to the third quarter totaled 4.63 trillion won and likely reach over 6 trillion won for the full year.

The company was less affected by the prolonged slump in domestic demand as its mainstay is in household essentials that consumers need to buy regardless of stagnated income. The division maintained sales of over 1.5 trillion won as its items commanded predominance in shampoo, toothpaste, and kitchen cleaning market. Its beverage division also raises steady 1 trillion won in annual sales.

The explosive growth of its beauty line was the biggest driver of its operating profit. Beauty care products that generated profit of 73 billion won until 2009 raked in 440 billion won as of September this year, accounting for 63 percent of the company’s total income. They have become highly profitable as they sell well mostly to Chinese shoppers in the same price category as foreign high-end brands in department stores and duty-free shops.

Despite a decline in the number of Chinese tourists to Korea, outlook for LG Household & Health Care is still bright, said Park Hyun-jin, analyst at Dongbu Securities Co. pointing to improving profit margins of household products and growing sales of upscale cosmetics labels in Chinese department stores and online shopping malls.

The company’s launch of pet care line was also well-timed as the local pet-related market is expected to reach 6 trillion won by 2020, according to a research institute. Chun Sang-yong, analyst at Golden Bridge Investment & Securities Co. expected that LG Household & Health Care to do well in the pet care market based on its high brand power in the personal care market.

By Lee Yong-gun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]