Small Korean beauty manufacturers shine as demand grows

[Courtesy of Kolmar Korea, COSMAX]

Korean beauty is riding a wave of global popularity, bringing smiles to the faces of cosmetics original design manufacturers (ODM) and original equipment manufacturers (OEM) including Kolmar Korea Co. and COSMAX Inc. As small and affordable beauty brands gain traction, these manufacturers are experiencing significant growth in performance.

In contrast, industry leaders Amorepacific Corporation and LG Household & Health Care Ltd. find themselves facing challenges in the Chinese market, leading to a downturn in their business performance.

According to the Financial Supervisory Service data on Sunday, both Kolmar Korea and COSMAX are showing notable upward trends in their earnings.

Kolmar Korea reported a revenue of 1.6 trillion won for the first three quarters of 2023, up 15.7 percent from the year before. Operating profit during the same period also soared by 53 percent on-year to 98.8 billion won.

COSMAX also had robust results, with revenue hitting 1.34 trillion won for the corresponding period, up 11.8 percent from the year before, and operating profit jumped 84 percent to 93.1 billion won.

Small and affordable Korean beauty brands are being praised for their value on platforms such as TikTok and Instagram, and this has contributed to Kolmar Korea and COSMAX’s success.

On the other hand, industry pioneers Amorepacific and LG Household & Health Care are seeing their performances falter, mainly due to their heavy reliance on the Chinese market.

LG Household & Health Care reported a fourth-quarter consolidated revenue of 1.56 trillion won with an operating profit of 54.7 billion won in 2023, or declines of 13.3 percent and 57.6 percent respectively compared to the same period the year before. The reduction in local demand in China with a more than 30 percent drop in sales, notably in duty-free stores, is cited as a significant factor.

These factors are also proving a challenge for Amorepacific. Analysts predict that the company will report a 9.7 percent fall in revenue and a 54 percent drop in operating profit for the fourth quarter of 2023, which will total 982.7 billion won and 26.2 billion won respectively. On a consolidated basis, the company’s full-year revenue and operating profit for 2023 were estimated to total 3.76 trillion won and 123.1 billion won, down 9 percent and 42.5 percent respectively, from the previous year.