Amorepacific Corp. reported a dramatic surge in operating profit for the second quarter, driven by a recovery in its troubled Chinese operations and improved cost management, even as net income tumbled due to accounting effects from prior acquisitions.
The South Korean cosmetics giant posted operating profit of 73.7 billion won ($53 million) for the three months ended June 30, up 1,673% from the same period last year when the company barely broke even. Revenue climbed 11.1% to 1.01 trillion won ($727 million), with overseas sales outpacing domestic growth at 14.4% versus 8.2%.
The results mark a significant operational turnaround for the owner of luxury brands Sulwhasoo and Laneige, which has been restructuring its Chinese business after years of losses. Greater China revenue jumped 23.2% to 132.7 billion won ($95 million), while the region achieved overall improvement in operating profit through business restructuring efforts.
Net income plummeted 92.9% to 37.6 billion won ($27 million), largely reflecting the absence of one-time gains from last year’s COSRX acquisition that boosted 2024 results by approximately 400 billion won. Excluding those extraordinary items, the company’s underlying profitability showed substantial improvement.
Despite the strong operational performance, Amorepacific shares declined more than 5% over three trading days following the earnings announcement, suggesting investor skepticism about the sustainability of the recovery. The stock performance contrasted with competitor LG Household & Health Care, which reported an 8.8% decline in revenue and a 65.4% drop in operating income.
The luxury segment led domestic growth with revenue rising 17.3% to 329.6 billion won ($237 million), driven by Sulwhasoo’s First Care Activating Serum marketing campaigns and Iope’s retinol product line expansion. The premium segment declined 16.9% to 101.1 billion won ($73 million), though the company attributed much of this to brand reclassification rather than underlying weakness.
Western markets showed solid momentum with Americas revenue growing 10% and EMEA surging 18%, supported by new product launches including Laneige’s Bubble Tea collection and expanded distribution through channels like Sephora.
Analysts noted that the Chinese turnaround represents a crucial milestone for Amorepacific, which had struggled with inventory management and distribution challenges in the market. The company has restructured its transaction model and significantly reduced offline store counts to improve efficiency.
The cosmetics maker maintained gross profit margins at 72.6%, up 2.1 percentage points from the prior year, through stricter promotion control and an enhanced brand mix. Marketing expenses declined 10.9% as part of company-wide cost optimization efforts, while personnel costs rose 9.7% due to performance-based incentive payouts.
