[THE INVESTOR] LG Household & Health Care more than met the expectations for its second-quarter earnings and will perform even better in the future, analysts said.
Its April-June operating profit hiked 34.1 percent to 225.4 billion won (US$198.78 million) and earnings came in at 1.55 trillion won, rising 18.5 percent from the same period last year, according to Financial Supervisory Service’s data released on July 27.
The Q2 figures are the highest ever for the company that also broke record for the first half of the year. And are slightly better than analysts’ expectations.
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A Whoo store is packed with Chinese travelers at Lotte Department Store in Sogong-dong, central Seoul. |
“They are bolstered by the sales of higher-priced cosmetics,” said Yang Ji-hye, an analyst at Meritz Securities. “The History of Whoo, an established brand based on Oriental medicinal ingredients, has led the growth and su:m 37 is showing sharp rise,” she explained.
The two “prestige” lines’ turnover soared as high as 70 percent, largely contributing to the 33 percent increase in cosmetics sales.
On the strength of higher-end cosmetics experts are painting a rosy picture for the LG affiliate, especially as the third quarter last year will have a base effect as it was hit by Middle East respiratory syndrome outbreak.
“In line with the second quarter, sales from duty-free stores will be brisk,” said Park Hyeon-jin, an analyst at Dongbu Securities. Revenue from duty-free cosmetics sales in Q2 surged 96 percent on-year.
The number of Chinese visitors in June came in at 760,000, up 141 percent from 2015, and is steadily rising, driving the expectations higher.
“There has been some voice of worry for beauty industry in relation to THAAD,” said O Rin-a, an analyst at ebest Investment & Securities. But “it is time to pay attention to the momentum of growth, based on an increase in inbound tourists in the third quarter,” she noted.
Despite the sluggish economy, household goods and beverage units also maintained steady growth, said Lee Seung-uk, an analyst at SK Securities, with sales increasing 7.4 percent and 3.7 percent on-year, respectively.
By Hwang You-mee (
glamazon@heraldcorp.com)
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