LG Household & Health Care swung back to profit in the first quarter as restructuring efforts and surging North America sales began to bear fruit, even as annual growth continued to lag, the company said Sunday.
The company reported operating profit of 107.8 billion won ($73 million) on revenue of 1.58 trillion won, with sales rising 7 percent from the prior quarter and operating margins rebounding to 6.8 percent from negative 4.9 percent. Compared with a year earlier, however, revenue fell 7.1 percent and operating profit dropped 24.3 percent.
"The intensive restructuring of domestic distribution channels, centered on duty-free operations since last year, is gradually yielding results," a company official said, pointing to product differentiation and global and digital markets as the path forward.
Overseas sales edged up 0.9 percent on-year, carried largely by North America, where sales surged 35 percent, offsetting declines of 14.4 percent and 13 percent in China and Japan, respectively.
The beauty division, the company's key earnings driver, posted revenue of 771.1 billion won and operating profit of 38.6 billion won, down 12.3 percent and 43.2 percent on-year. Heavier marketing spend and a push to streamline offline stores took a toll on earnings, even as brands including Dr. Groot and Euthymol continued to gain ground abroad, the company explained.
The home care business felt the pinch of weaker offline demand, while the refreshment segment, tied to its Coca-Cola bottling operations, also posted softer sales and profit. The company expects global sporting events, including the FIFA World Cup, to provide a lift to beverage demand through marketing campaigns.
minmin@heraldcorp.com
