Amorepacific (090430) Q2 2024 earnings summary

Executive summary

• Revenue declined 4.3% year-over-year to 904.8 billion KRW, with operating profit down 29.5% to 4.2 billion KRW.

• Net income surged to 530.6 billion KRW, driven by significant other income, despite lower operating profit.

• Domestic business revenue fell 7.8%, while overseas business grew 2.5%, led by strong Western region performance.

• Revenue for H1 2024 was KRW 1,816.2 billion, down 2.3% year-over-year, while operating profit rose 9.4% to KRW 76.8 billion.

• Overseas sales remained flat at KRW 718.2 billion, with strong growth in North America and EMEA offsetting a 32% drop in China.

Financial highlights

• Gross profit margin improved to 70.7% from 68.6% year-over-year.

• SG&A expenses decreased 0.7% year-over-year, with personnel expense up 4.7% and marketing expense down 2.9%.

• Net income rose sharply due to a one-time gain in other income.

• Basic EPS for common shares was KRW 8,847 for H1 2024, up from KRW 1,585 in H1 2023.

• Cash and cash equivalents at period end were KRW 1,617.3 billion.

Outlook and guidance

• BY25 goal targets late-teen revenue growth and high single-digit operating profit margin, including COSRX consolidation.

• Strategic focus on global market expansion (US, UK, Japan, India) and normalization of China business.

• Focus on strengthening core brands and expanding global business, especially in North America and EMEA.

• Continued investment in R&D and digital transformation to drive innovation and operational efficiency.

• Management expects stable cash flow and aims to maintain dividend policy and prudent capital allocation.