LG H&H denies rumor of discussing purchase of local dairy firm Purmil

[Source: LG Household & Health Care Co.]

LG H&H Co. seeking to expand food supplement business is floated as one of candidates to buy Purmil Co., a South Korean manufacturer of dairy products, but the Korean cosmetics giant has declined the market rumor.

According to sources in the local food industry, Purmil, formerly known as Lotte Milk founded in 1978, has been looking for a new owner to turn around its money-losing business, and it reportedly had a meeting with working-level officials from LG H&H to discuss its potential transfer of management rights.

An unnamed LG H&H official, however, denied such rumors, saying that there is nothing currently going on regarding the company’s potential acquisition.

Purmil was spun off from Lotte Group in April 2007 and changed its name in 2009.

Under a professional management team led by Nam Woo-sik, Purmil’s annual sales peaked at some 300 billion won ($236 million) thanks to nationwide hits such as “Bifidus,” “Milk with Black Soybean” and “Purmil Ganachoco Milk”.

But earnings growth began to slow in early 2018 when the company promoted its vice president Shin Dong-hwan, the second son of Shin Joon-ho, chairman of Purmil and younger brother of Lotte Group founder Shin Kyuk-ho, to president, giving the owner family control over management.

Purmil swung to a loss for the first time in 10 years in 2018 with sales falling to 230 billion won. The company reported an operating loss of 12.37 billion won over sales of 180 billion won in 2021.

Chairman Shin stepped down from his position last year, but the company’s business has failed to turn around. Market watchers say that Purmil’s financial difficulties are largely owed to its weak distribution channel and a suspended school milk program, but its potential as a company with milk fermentation technology remains high.

LG H&H and other potential buyers may create synergy from the acquisition of Purmil in the ever-expanding food supplement market. Purmil’s corporate value is estimated to be at 30 billion won to 50 billion won.

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