AMOREPACIFIC Group reported sales of 4,771.9 billion won in 2014, up 21% from the same period last year, and operating profit of 659.1 billion won which climbed 40.3%. The group achieved solid growth driven by cosmetics subsidiaries’ strong growth in Koreea and global market, and especially, AMOREPACIFIC Corporation recorded sales of 3,874.0 billion won (+25%) due to strengthened brands and innovation of distribution channels, as well as expanding business outside Korea.

■ Results of Major Subsidiaries in 2014
[Cosmetics Subsidiaries] sales at 4,467.8 billion won (+23.3%) operating profit at 663.8 billion won (+44.2%)

1) AMOREPACIFIC Corp., sales at 3,874.0 billion won (+25%), operating profit at 563.8 billion (+52.4%)

Despite the continued market stagnation, AMOREPACIFIC Corporation posted a solid sales growth of +25% like-for-like due to strengthened brands and innovation of distribution channels, as well as expanding business outside Korea. The growth was driven by the new growth channels including digital and duty-free, and ARITAUM, which provides differentiated customer experience. The rapid increase in operating profit was driven by improved profitability in the overseas businesses. The company’s major businesses reported sales results as follows: ① Domestic Cosmetics Business at 2,578.9 billion won (+23.5%), ② Global Cosmetics Business at 832.5 billion won (+52.8%), ③ Mass Business and Sulloc Business at 462.6 billion won (-1.1%).

① Korea Cosmetics Business achieved solid growth driven by the duty-free channel as the number of foreign inbound tourists to Korea increased rapidly. Sales in the new growth channels based on digital platforms, such as home shopping and e-commerce, also drove improved profitability and contributed to the quality growth. Moreover, solid growth of major brands like Sulwhasoo, HERA, and Primera helped expand the company’s market share in the department stores.

② Global Cosmetics Business has expanded in major emerging markets including China and ASEAN, and achieved high levels of growth in sales. Though the sales in Japan and France dropped due to the domestic economy slump, all channels in the U.S. reported the high levels of growth in sales.

The sales in China rose by 44% (based on RMB) reaching 467.3 billion won, resulting from strengthened brand awareness and channel diversification. Sulwhasoo and innisfree drove high levels of growth in sales through opening new stores and attracting new customers. LANEIGE achieved quality growth by improving its profitability through strengthening its competitiveness in the digital channel and department stores, and expanding sales of best-selling products. Mamonde realigned distribution channels and renovated stores to further enhance brand power.

In other parts of Asia (excluding China and Japan), AMOREPACIFIC reported profit turnaround as a result of an effort to strengthen brand and distribution portfolios. Solid store sales with profitability improvement delivered by improved brand power and increased sales of hit products of representative brands such as Sulwhasoo and LANEIGE lead to strong sales growth. The launch of innisfree in major Asian markets including Singapore, Malaysia, and Taiwan became another growth engine, and inclusion of joint venture in Hong Kong helped to expand the group’s presence in Hong Kong market and accelerate penetration into the Greater China Region.

The operating profit in the U.S. turned to a gain as the sales of across all distribution channels recorded high levels of growth. In particular, the sales increase of AMOREPACIFIC’s best-selling items drove the solid growth in sales across all channels of department stores, SEPHORA and online shops. LANEIGE successfully made its first launch in the U.S. market through Target as well.

In France, the sales slightly dropped due to the market slowdown in Europe, however the deficit was reduced through efficient cost management.

In Japan, sales decreased due to realignment of brand and channel portfolio.

 

2) ETUDE, sales at 306.5 billion won (-9%), operating profit at 5.6 billion won (-79%)

ETUDE experienced decrease in both sales and operating profit, due to reduced cuts in transaction with global agents and expanded investment on marketing to strengthen the brand power. The company will continue to make an effort to build up brand competitiveness via re-establishment of brand story and renovation of store design.

3) innisfree, sales at 456.7 billion won (+37%), operating profit at 76.5 billion won (+54%)

innisfree reported growth in sales with improved profitability across all channels, with the popularity of its best-selling Jeju-branded items (Jeju Volcanic and Green Tea line) and the launch of new products (Jeju Orchid, Creamy Tint Lip Mousse, Smart Foundation, etc.). innisfree's expansion of overseas business resulted in increased export sales and soaring number of tourists helped the brand continues its growth in duty free sales.

4) Amos Professional, sales at 54.6 billion won (+12%), operating profit at 11.6 billion won (+1%)

Amos Professional experienced a solid growth in total sales, due to rising sales of major products such as ‘Feel the Green Tea’ line and curling essence in hair tonic, cleansing, and colorants categories. High growth in duty-free channels led increase in commission fees for distribution, which ultimately increased the operating profit within narrow limits.