LG Household & Health Care score its best for Q4 and 2020

LG Household & Health Care Ltd., South Korea’s cosmetics and household goods maker, delivered best-ever results for the fourth quarter and year despite adverse business environment due to Covid-19, thanks to brisk sales of premium cosmetics products and robust online demand in China.

In its regulatory filing on Wednesday, LG Household & Health Care said its consolidated operating profit in the October-December period reached 256.3 billion won ($232 million), up 6.3 percent from the same period a year ago, and sales 2.09 trillion won, up 4 percent. The company’s net profit also gained 6.6 percent on year to 142.6 billion won.

Both sales and operating profit grew year-on-year to achieve record high fourth-quarter figures “even in difficult business environment where consumer sentiment plunged even further from the third wave of Covid-19,” the company said.

Shares of LG Household & Health Care ended 1.48 percent lower at 1.602 million won on Wednesday.

In the fourth quarter, its beauty business raised 225.4 billion won in operating profit, up 5.4 percent on year, on sales of 1.3 trillion won, down 0.9 percent during the cited period. Demand for luxury cosmetics brands was high particularly in China where sales jumped 41 percent on year on the back of diversified digital sales channels.

Its home and personal care business (HPC) saw sales grow 23.6 percent to 423 billion won in the fourth quarter from the previous year. Operating income also reached 10 billion won, up 7.4 percent during the same period. Solid earnings were mainly driven by premium brands such as its anti-hair loss shampoo and conditioner line Dr. Groot and Veilment fragrance brand.

The company’s efforts to expand direct sales in the e-commerce market, enhance online marketing activities, and actively carry out live broadcasting to sell items paid off.

Its refreshment business that includes beverages raised 346.9 billion won in sales in the fourth quarter, up 3.7 percent from the same period a year ago. Operating income reached 20.9 billion won, up 17.1 percent. Both sales and profit gained in the cited quarter despite the off-peak season thanks to high demand for major items Monster Energy and Seagram.

For the full year, LG Household & Health Care raised 1.2 trillion won in operating income, up 3.8 percent on year, on sales of 7.8 trillion won in sales, up 2.1 percent. Net profit jumped 3.2 percent to 813.1 billion won, marking the 16th straight year of growth.

Beauty business raised 964.7 billion won in operating income in 2020 on sales of 5.5 trillion won. Its debt ratio also fell 13 percentage points from 53.3 percent in the end of 2019 to 40.3 percent in the end of 2020 thanks to profit growth.

Market insiders credit Cha Suk-yong, vice chairman and chief executive of LG Household & Health Care, for the company’s stellar performance.

Ever since Cha took on the role in 2005, LG Household & Health Care’s operating income increased for the 62nd quarter. In his New Year’s address earlier this month, Cha emphasized the importance of enhancing global business and internal stability and responding to changes in the market.

“The company was able to confirm high customer loyalty on the brand through the Covid-19 crisis and its financial conditions remain stable,” said Park Eun-kyung, a researcher at Samsung Securities.

Brokerages, citing undervaluation, proposed its stock price to soar as high as 2.12 million won.

Park expected the company’s market share to expand further this year at home and abroad.

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