Representative K-beauty companies Amorepacific and LG Household & Health Care have entered a phase of performance improvement by lowering their reliance on China and expanding their global business centered on North America and Europe. For the first time in its history, LG Household & Health Care's North American sales surpassed those from China, while Amorepacific is also expected to see significantly improved profitability driven by growth trends in North America and Europe.
On the 29th, LG Household & Health Care disclosed that its consolidated sales for the second quarter reached 1.6574 trillion won, with an operating profit of 102.8 billion won. Sales increased by 3.3% year-on-year, while operating profit surged by 87.5%. This represents a significant 'earnings surprise,' far exceeding the market forecast of around 70 billion won in operating profit.
The most notable change lies in its overseas business structure. Overseas sales rose to 584.5 billion won, up 12.6% from the same period last year, while North American sales jumped to 205.8 billion won, a 47.3% increase. In contrast, China's sales fell by 5% to 176 billion won. This marks the first time since LG Household & Health Care's spin-off that North American sales have surpassed those from China.
The beauty business also successfully turned profitable. Driven by portfolio restructuring and expansion of growth channels such as digital commerce and H&B stores, the segment recorded sales of 818.4 billion won and an operating profit of 44.4 billion won. Growth was led by brands including Dr.Groot, YouSeeMall, Hince, and VDL. In particular, Dr.Groot is set to strengthen its North American push by starting sales at Cera stores across the United States next month, following its entry into Costco offline stores in the U.S. last year.
Amorepacific, which will announce its results on the 30th, is also expected to see the full effects of its overseas expansion take hold. According to financial information provider F&Guide, Amorepacific's second-quarter sales are estimated at 1.846 trillion won, a 7.9% increase year-on-year, while operating profit is projected to reach 97 billion won, up 31.6%.
Amorepacific is also reducing its reliance on China while cultivating North America and Europe as new growth engines. During Amazon Prime Day held last month, North American sales rose 20% year-on-year, and European sales increased by 22%, achieving record-breaking results. Brands beyond Laneige and COSRX, including Missha, Etude, and Labohm, also climbed into the top sales rankings, broadening their brand reach.
Securities firms believe that while burdens from adjustments to China operations will persist, they can be more than offset by overseas growth. Ha Hee-ji, a researcher at Hyundai Motor Securities, analyzed: "While China's sales may decline due to the impact of reducing Sulwhasoo store space in its Chinese subsidiary, high growth continues in the Americas and Europe, Middle East, and Africa (EMEA) regions, and growth for brands beyond Laneige is also gaining momentum."
At the heart of both companies' performance improvement lies a structural shift in the K-beauty export market. Cosmetics exports hit a record high in the first half of this year, with the United States solidifying its position as the largest export destination, while China's share continues to shrink. Whereas past performance hinged on whether the Chinese market would recover, analysts now note that growth engines are diversifying around North America and Europe, leading to reduced earnings volatility.
A beauty industry official also stated, "In the past, China's performance dictated the results of major K-beauty companies, but now North America and Europe have emerged as new growth engines." The official added, "Both companies are seeing the full effects of diversifying their overseas portfolios while reducing reliance on China, making it highly likely that profitability improvements will continue into the second half of the year."
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