Amorepacific Group, South Korea’s largest beauty conglomerate, witnessed a significant downturn in its stock value, closing at 3,400 won ($2.6) following the announcement of disappointing 2023 financial results. The decline was primarily attributed to reduced sales in China and in duty-free shops, which significantly impacted the company’s bottom line.
The group reported a consolidated operating profit of 152 billion won for 2023, marking a 44.1% decrease from the previous year. Revenue fell by 10.5% to 4.02 trillion won, although net profit saw a 57.3% increase to 234.7 billion won. The fourth quarter of 2023 was particularly challenging, with operating profit plummeting by 62% to 29.9 billion won and revenue dropping 14% to 1.02 trillion won. However, quarterly net profit experienced a substantial boost, soaring 2.5 times to 47.9 billion won.
Amorepacific Corp., the affiliate operating the group’s cosmetics brands, also experienced a downturn, with its stock falling 13% to 118,000 won. The affiliate’s operating profit decreased by 49.5% to 108.2 billion won, and revenue declined by 11.1% to 3.67 trillion won. Domestic business operating profits fell by 34%, with a 14.4% decrease in revenue from the Korean market, largely due to lower sales in duty-free shops, e-commerce platforms, and increased marketing expenses.
The affiliate’s overseas business swung to a loss of 43.2 billion won from a profit of 2.5 billion won in 2022, with revenue falling by 5.5% to 1.39 trillion won. A significant 25% drop in sales in the Chinese market was a key factor, overshadowing gains in other regions such as Japan, the US, and the EMEA region, which saw sales increases of 30%, 58%, and 62%, respectively.
Subsidiaries such as Innisfree, Espoir, and O’Sulloc faced profit declines due to heightened marketing costs. However, Etude emerged as a bright spot, with profits jumping 95.5% to 14.8 billion won, bolstered by new store openings in tourist areas and enhanced sales through e-commerce and offline channels.
Amorepacific Group’s financial challenges in 2023 reflect the broader difficulties faced by South Korean cosmetics companies in navigating geopolitical tensions, changing consumer preferences, and the highly competitive nature of the global beauty industry.
