KOSPICosmetics051900

LG H&H

₩270,500▼ 0.37%2026-10-02 close

Market Cap

₩4.1T

Turnover

₩15.1B

Volume

60,000 shares

Shares out.

15M

PER

—

PBR

0.9×

EPS

-₩4,514

Dividend Yield

0.68%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩2,000 per share · Prices as of the 2026-10-02 close

Report overview

North America Overtakes China: A Mid-Course Check on the Restructuring

After posting its first annual net loss attributable to owners in 2025, LG H&H saw operating profit recover in the first half of 2026, yet the top line is still shrinking, making the progress of its profit-first restructuring the key thing to watch.

1
In 2025 revenue was KRW 6.356tn and operating profit KRW 170.7bn (2.7% margin), a steep drop from 2022 (KRW 711.1bn, 9.9%), and the company booked a KRW 100.1bn net loss attributable to owners.
2
Following a Q4 2025 operating loss of KRW 72.7bn and a net loss attributable to owners of KRW 251.7bn, the company returned to profit with KRW 107.8bn in Q1 2026 and KRW 102.8bn in Q2 2026.
3
Per company disclosure, North American revenue exceeded China revenue for the first time in Q2 2026, with overseas sales reaching 35% of the total.
4
Still, first-half group revenue declined year on year and the beauty division shrank on a cumulative basis, so critics note the profit recovery leans heavily on cost efficiency.
5
The debt-to-equity ratio fell to 23.3% at end-2025 from 33.5% in 2022, and 2025 operating cash flow of KRW 446.4bn shows cash generation held up despite the net loss.

Business structure

LG H&H is a diversified household consumer company organized into three divisions: Beauty (cosmetics), Home Care & Daily Beauty (HDB), and Refreshment (beverages).

Company-disclosed Q2 2026 divisional revenue was KRW 818.4bn for Beauty, KRW 377.6bn for HDB and KRW 461.4bn for Refreshment, with operating profit of KRW 44.4bn (a swing back to profit), KRW 22.3bn and KRW 36.1bn respectively.

Beauty is anchored by the luxury brand The Whoo, supported by belif, CNP and THE FACE SHOP, and press reports note that close to half of cosmetics revenue comes from The Whoo, a single-brand concentration long flagged as a weakness.

Data cited by one outlet put The Whoo at 34% of the relevant sales base in Q1 2026, with Dr.Groot at about 6% and Yusimol at about 3%. Management has designated ten core brands, adding Dr.Groot, Yusimol, Physiogel, VDL, Dominas and Pra.L to the four above, and is concentrating resources on them.

Dr.Groot and Yusimol in particular were carved out into a separate Neo Beauty division to be developed as high-tech beauty and health care franchises. Refreshment produces and distributes the Coca-Cola beverage lineup in Korea and is sensitive to seasonality and input costs.

On channels, the company is shrinking traditional duty-free and door-to-door exposure while building online and health-and-beauty store sales, alongside restoring distribution discipline in China and diversifying toward North America and Japan.

Domestically Amorepacific remains the traditional rival, while newer brand houses such as APR and Dalba Global have been rapidly gaining share in Western channels.

Earnings trend

Quarterly revenue · Operating profit

₩1.6T₩54.8B25Q2₩1.6T₩46.2B25Q3₩1.5T-₩72.7B25Q4₩1.6T₩107.8B26Q1₩1.7T₩102.8B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩7.2T₩711.1B2022₩6.8T₩487B2023₩6.8T₩459B2024₩6.4T₩170.7B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.6T	₩54.8B	3.4%
2025Q3	₩1.6T	₩46.2B	2.9%
2025Q4	₩1.5T	-₩72.7B	−4.9%
2026Q1	₩1.6T	₩107.8B	6.8%
2026Q2	₩1.7T	₩102.8B	6.2%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩7.2T	₩711.1B	₩236.6B	9.9%	4.4%	33.5%
2023	₩6.8T	₩487B	₩142.8B	7.2%	2.6%	30.1%
2024	₩6.8T	₩459B	₩189.1B	6.7%	3.4%	30.2%
2025	₩6.4T	₩170.7B	-₩100.1B	2.7%	−1.8%	23.3%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Over the multi-year window revenue drifted down from KRW 7.186tn in 2022 to KRW 6.805tn in 2023, KRW 6.812tn in 2024 and KRW 6.356tn in 2025, while operating profit fell far faster, from KRW 711.1bn to KRW 487.0bn, KRW 459.0bn and KRW 170.7bn.

The operating margin compressed from 9.9% in 2022 to 7.2%, 6.7% and finally 2.7% in 2025, the year the company swung to a KRW 100.1bn net loss attributable to owners from a KRW 189.1bn profit in 2024.

Most of the damage was concentrated in the fourth quarter: Q4 2025 revenue of KRW 1,472.8bn came with a KRW 72.7bn operating loss and a KRW 251.7bn net loss attributable to owners, a gap indicating sizeable non-operating charges.

Brokerage analysis put the beauty division's operating loss that quarter at KRW 81.4bn, including roughly KRW 40bn of one-off voluntary retirement costs.

In 2026 the company posted two consecutive profitable quarters, with Q1 revenue of KRW 1,576.6bn and operating profit of KRW 107.8bn, followed by Q2 revenue of KRW 1,657.4bn and operating profit of KRW 102.8bn, lifting the first-half operating margin into the 6% range, well above the full-year 2025 level.

That said, Q2 revenue rose only modestly against KRW 1,604.9bn a year earlier, and first-half revenue fell 2.1% to KRW 3,234.0bn while Beauty declined 4.7% to KRW 1,589.5bn.

The company and media reports noted that a U.S. tariff refund gave a temporary lift in Q2, though operating profit still improved sharply excluding such one-offs.

Balance-sheet metrics moved the other way in a positive sense: the debt-to-equity ratio eased from 33.5% in 2022 to 23.3% in 2025, and operating cash flow, while declining from KRW 659.1bn in 2023 to KRW 527.6bn in 2024 and KRW 446.4bn in 2025, stayed firmly positive through the loss year.

Industry analysis

End demand for K-beauty is in a strong expansion phase.

According to Ministry of Food and Drug Safety data, first-half 2026 cosmetics exports rose 27.3% to a preliminary USD 7.0bn, a record half-year, with Q2 exports of USD 3.9bn topping Q1's USD 3.1bn, and the United States retaining the top spot at USD 1.45bn, 20.7% of the total and up 41.5%.

China, once the largest market, moved the other way, with first-half cosmetics exports down 5.1% to USD 850mn, a second straight year below the USD 1bn mark.

The cycle is therefore asymmetric, rising in Western markets and falling in China, which puts outsized restructuring pressure on a company historically weighted toward China.

On the ground in China, slower growth and the guochao preference for domestic brands have let local players expand share with affordable, high-function products, while sales have shifted to online platforms and influencers, forcing global brands to rewrite channel strategy. Competitive positioning shows a clear gap.

Amorepacific reported Q2 2026 revenue of KRW 1,175.9bn, up 17.0%, and operating profit of KRW 117.3bn, up 59.3%, beating consensus, with Americas revenue up 56.5% to KRW 210.4bn.

APR posted the same quarter's revenue at KRW 767.5bn, up 134.2%, and operating profit of KRW 190.6bn on explosive North American and European growth.

Meanwhile U.S. tariffs on Korean cosmetics are an industry-wide cost variable already being passed through at the distribution layer, and how much of it can be absorbed is cited as a swing factor for second-half results.

Outlook

Management's stated direction weights profitability and brand selection over top-line scale. CEO Lee Sun-joo set out four 2026 priorities: brand portfolio reshaping, customer experience innovation, focused investment in high-growth regions, and profit-structure realignment.

The company has adopted a "Science Driven Beauty & Wellness Company" vision and launched the third-generation Cheongidan brightening and anti-aging line under The Whoo.

In China, its Beijing household-products manufacturing entity has entered liquidation as the joint-venture contract expired and results deteriorated, with resources instead concentrated on rebuilding The Whoo and premium skin brands such as Physiogel.

DB Securities analyst Heo Je-na said in a July 2026 report that new channel entries including Sephora and Costco are planned for the second half, and forecast that SKU expansion would keep quarterly profitability intact.

Hanwha Investment & Securities, in an August 2026 report, estimated second-half consolidated revenue of KRW 3,365.0bn and operating profit of KRW 183.0bn, and said duty-free supply would stay managed through year-end to clear second-generation Cheongidan inventory while a low base and wider demand would improve both revenue and profitability.

In North America, channel traction is showing up in the data. During Amazon Prime Day in June 2026, sales of Dr.Groot and Yusimol each rose roughly 50% year on year. On shareholder returns, the board approved an interim dividend in July 2026, continuing a practice begun the prior year.

Whether these plans keep the beauty division profitable for consecutive quarters and halt the revenue decline, however, remains to be verified.

Valuation

PER

—

PBR

0.9×

ROE

-1.3%

EPS

-₩4,514

BPS

₩337,454

Dividend per share

₩2,000

Because the trailing four-quarter window (Q3 2025 through Q2 2026) still carries a net loss attributable to owners, a price-to-earnings ratio cannot be computed at all, a direct consequence of the large Q4 2025 loss remaining inside that window.

The shares trade below their book value per share, so the market is currently anchoring on an asset-based multiple rather than an earnings-based one. The company pays both an annual and an interim dividend, though the resulting yield is not conspicuously high within the cosmetics sector.

Brokerage views split after the quarterly results. As reported on 30 July 2026, DB Securities raised its target price from KRW 250,000 to KRW 380,000, LS Securities from KRW 250,000 to KRW 350,000, Shinhan Securities from KRW 279,000 to KRW 335,000, and KB Securities from KRW 310,000 to KRW 330,000.

Hanwha Investment & Securities said on 5 August 2026 that earnings predictability had improved, upgrading its rating from Neutral to Buy and its target price from KRW 280,000 to KRW 350,000.

These are the brokerages' own views; the point to observe is what multiple the market applies to the earnings stream once Q4 2025 rolls out of the trailing window.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Regional Portfolio Shift Now Visible in the Numbers

Q2 2026 overseas revenue rose 12.6% to KRW 584.5bn, or 35% of the group total, with North America up 47.3% to KRW 205.8bn while China fell 5.0% to KRW 176.0bn, the first time North America has outsold China since the company was spun off as a standalone entity.

Already in Q1, North American revenue rose 35% to KRW 168.0bn, narrowing the gap with China to just over KRW 10bn. Since China dependence was the source of earnings volatility, the shift in the growth axis reads as evidence of structural change. Even so, North America's absolute scale remains only a slice of group revenue.

Beauty Returns to Profit as Cost Structure Is Reset

Beauty division operating profit swung positive to KRW 44.4bn in Q2 2026 and revenue grew for the first time in six quarters, which the company attributed to Dr.Groot, Yusimol, Dominas, VDL and hince gaining across domestic and overseas online and offline channels.

The confirmed figures trace the same path: from a KRW 72.7bn operating loss in Q4 2025 to profits of KRW 107.8bn in Q1 2026 and KRW 102.8bn in Q2. Even in Q1, when revenue fell, the operating margin reached 6.8%, and the market credited duty-free volume management, fixed-cost reduction and a narrower China loss.

The three-division structure, which keeps profit contribution from resting on Beauty alone, also cushions the downside.

Financial Headroom Alongside an Industry Upcycle

The debt-to-equity ratio fell from 33.5% in 2022 to 23.3% in 2025, and even in a loss year the company generated KRW 446.4bn of operating cash flow. That implies capacity to fund restructuring costs and new-channel investment at the same time.

The end market is also strong, with first-half 2026 cosmetics exports at a record USD 7.0bn for a half-year and Q2 running ahead of Q1. On top of that, brokerage reports cite planned second-half entries into new channels including Sephora and Costco.

Bear factors

The Top Line Is Still Contracting

The confirmed data show revenue declining for three straight years, from KRW 7.186tn in 2022 to KRW 6.356tn in 2025. In the first half of 2026, revenue again fell 2.1% to KRW 3,234.0bn, with Beauty down 4.7% to KRW 1,589.5bn.

Beauty revenue turning up in Q2 for the first time in six quarters was positive, but commentators called the growth rate marginal. Some market participants question the quality of the recovery, noting that headcount efficiency and cost cuts drove the improvement while top-line growth stayed weak.

Single-Brand Dependence on The Whoo and Weak China

Press reports say The Whoo's revenue fell KRW 450bn year on year to KRW 1,102.1bn, effectively back to where it stood nine years earlier, and that the Beauty division's revenue fell 16.5% to KRW 2,350.0bn over the same period.

THE FACE SHOP is described as lacking hits beyond its Migamsu line, while belif and CNP are seen as short of a differentiated flagship product amid rising dermocosmetics demand. China revenue fell 14.4% year on year in Q1 2026 and China still accounted for roughly 11% of the total. The small revenue contribution from replacement brands remains a structural burden.

One-Offs and Falling Beverage Profit

The company and media reports stated that a U.S. tariff refund temporarily contributed to the Q2 2026 improvement. That means part of the KRW 102.8bn quarterly operating profit is non-recurring in nature and warrants caution in sequential comparisons.

In the same quarter Refreshment revenue rose 0.5% to KRW 461.4bn but operating profit fell 15.1% to KRW 36.1bn. Declining profit from the relatively stable beverage business weakens a cushion within the group's earnings mix.

Risk factors

Restructuring and One-Off Costs

In Q4 2025 the net loss attributable to owners of KRW 251.7bn far exceeded the KRW 72.7bn operating loss, showing how sharply non-operating items can swing the bottom line. Brokerage analysis attributed roughly KRW 40bn of one-off voluntary retirement costs to that quarter.

With the liquidation of the Beijing household-products manufacturing entity and similar overseas cleanups under way, the possibility of further related charges needs monitoring. The group holds numerous subsidiaries including THE FACE SHOP, hince, Ginza Stefany, Avon and The Creme Shop, and its U.S. Avon unit has been flagged for multiple years of losses.

Tariffs and Trade Policy

U.S. tariffs apply to Korean-made cosmetics, and that cost lands before retail margin and before retailer marketing contributions, forcing a recalculation of previously set price structures.

Published implementing rules do not specify a phase-down schedule for cosmetics, leading to the reading that pricing should assume the burden persists through 2026.

Because the North America push and the tariff burden are running in parallel, the key issue is how much North American revenue growth translates into margin gains. A tariff refund was a one-time positive in Q2 2026, and such items are unlikely to repeat.

Channel and Competitive Environment

The company plans to keep managing duty-free supply volumes to restore brand equity, a strategy that deliberately accepts lower sales and thus pressures the near-term top line.

Domestically, the suspension of operations at some Homeplus stores has been cited as making declines in household-products and beverage sales unavoidable. At the same time rivals are moving faster in the same markets, as seen in Amorepacific's surge in Western-market revenue and APR's rapid growth. If new channel entries do not convert into actual revenue, the share gap could widen.

What to watch next

Late October 2026
Q3 2026 results. The key items are whether the Beauty division stays profitable for a third straight quarter, whether the operating margin excluding one-offs such as tariff refunds holds the first half's 6% range, and whether North American revenue continues to exceed China.
November 2026
Performance during China's Singles' Day and other large online shopping events. This is the point at which one can check whether The Whoo's rebuild, the third-generation Cheongidan line and Physiogel's digital-channel sales are enough to halt the decline in China revenue.
Q4 2026
Whether the new channel entries including Sephora and Costco cited by DB Securities in its July 2026 report actually proceed, and how fast SKUs expand. The lag between shelf placement and revenue recognition and its effect on North American growth should be watched together.
Late January to early February 2027
Confirmed Q4 and full-year 2026 results plus the year-end dividend decision. With the large Q4 2025 loss dropping out of the comparison base, this is where one can check whether annual profit recovers without further restructuring charges and how large the total annual payout, including the interim dividend, turns out to be.
Ongoing, H2 2026 to H1 2027
Whether any phase-down schedule for cosmetics emerges within U.S. tariff policy. Changes in tariff rates directly reshape the margin structure of the North America-centered strategy. Disclosures related to the completion of the Beijing household-products entity's liquidation are also worth tracking.

Overall view

LG H&H's confirmed results tell two stories at once.

Revenue fell from KRW 7.186tn in 2022 to KRW 6.356tn in 2025 and operating profit shrank from KRW 711.1bn to KRW 170.7bn, with a KRW 100.1bn net loss attributable to owners in 2025, yet the company then delivered two consecutive profitable quarters, KRW 107.8bn in Q1 2026 and KRW 102.8bn in Q2.

By division, Beauty swung back to profit in Q2 2026 and HDB operating profit rose 23.1%. Geographically, North American revenue grew 47.3% and surpassed China, which fell 5.0%, for the first time ever.

On the other side, cumulative first-half revenue still declined year on year, Q2 profit included a one-off tariff refund, and Refreshment profit fell.

The industry backdrop is asymmetric, with a U.S.-led K-beauty export boom running alongside a shrinking China market, and the comparison that rivals are growing faster remains.

The observation points therefore narrow to whether the cost-driven profit recovery converts into revenue growth, and whether the brands and North American channels meant to replace dependence on The Whoo reach real scale.

This report is for informational purposes only and contains no buy or sell opinion or target price for any security.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.