1. LG H&H Q2 2025: The Numbers
LG H&H reported Q2 2025 revenue of KRW 1.6049 trillion, operating profit of KRW 54.8 billion, and net profit of KRW 35.1 billion. These figures represent a 9%, 59%, and 60% miss, respectively, compared to market consensus. While revenue saw a slight decline from Q1, operating profit and net profit experienced a sharp drop.
2. Why the Underperformance?
The key factors contributing to this disappointing performance can be categorized into external and internal factors.
- External Factors: The prolonged global economic slowdown, weakened demand in the Chinese market, a persistent upward trend in the KRW/USD exchange rate, and rising raw material prices all played a role. The beauty segment, heavily reliant on the Chinese market, was particularly hard hit.
- Internal Factors: Increased competition in the cosmetics, household goods, and beverage markets, coupled with the uncertainty surrounding The Creme Shop arbitration, also contributed to the earnings decline.
3. What’s the Outlook?
With the ongoing global economic slowdown and uncertainty in the Chinese market, a short-term earnings recovery appears challenging. However, LG H&H maintains long-term growth potential thanks to its strong brand portfolio and ESG management efforts. The stabilization of raw material prices and exchange rates, as well as a potential recovery in the Chinese market, will be key factors influencing future performance.
4. What Should Investors Do?
A cautious approach is recommended for short-term investors. Closely monitoring macroeconomic indicators and the Chinese market situation is crucial, and investment strategies should be adjusted based on future earnings announcements and information disclosures. Long-term investors can consider a value-buying strategy, capitalizing on stock price volatility while focusing on LG H&H’s brand competitiveness and ESG initiatives.