LG H&H Operating Profit Reaches 70.4 Billion Won, Missing Estimates
Key Facts
LG H&H reported consolidated operating profit of 70.4 billion won in the third quarter of 2026, up 52.4% year over year but about 32% below the brokerage consensus of 103.4 billion won, according to a Chosunbiz report published on November 3. The result presents two contrasting pictures: an annual improvement in operating profitability and performance below the level analysts had expected. The divergence comes amid declines in revenue and net income, alongside the beauty division's return to an operating loss. Quarterly revenue was 1.5774 trillion won, down 0.2% from the same period a year earlier. Net income fell 45.2% to 12.8 billion won, showing that operating profit growth did not extend to the bottom line.
The beauty division was the biggest weak spot in the results, posting revenue of 660.8 billion won, down 0.3% year over year, and an operating loss of 10.9 billion won. The result was well below estimates from two brokerages cited in the report: NH Investment & Securities forecast operating profit of 10.8 billion won, while Sangsangin Investment & Securities projected a profit of 21.6 billion won. Both positive forecasts therefore turned into an actual quarterly loss, while the division's total revenue remained close to its level a year earlier. The gap between the estimates and the result reflects the pressure on the business compared with what investors had expected from the beauty unit. That made the division's performance a key factor behind the group's failure to meet the market consensus.
In China, the company's revenue was 115.1 billion won, down 21.1% year over year. The company attributed the decline to the effects of restructuring its online business, Chosunbiz reported, linking the decrease to changes in how the digital business is managed. The drop in China revenue coincided with the beauty division's loss, but the report did not identify weakness in the Chinese market as a direct cause of the unit's loss. The figures are separate measures of the company's performance in China and the beauty division's result, so one should not be reduced to the other. Revenue in China also fell more sharply than the limited decline in the beauty division's overall revenue, highlighting differences in performance across regions and businesses.
Operating profit in the beverages division fell 19.9% in the third quarter amid weak demand and rising cost pressures, according to the report. This means operating pressures were not confined to beauty, although their nature differed between the two divisions. For beverages, the report cited weaker demand and higher costs as factors behind the profit decline, without attributing it to either one alone. It did not give the division's operating profit figure or the basis for the year-over-year comparison, beyond the percentage decline. Still, the beverages decline adds to the beauty division's weakness, giving a broader picture of profitability challenges across the company's units in the quarter, even as consolidated operating profit rose from a year earlier.
Official Chinese data provide an economic backdrop separate from the company's results. The manufacturing purchasing managers' index stood at 49.3% in October, down 0.8 percentage points from the previous month, according to the National Bureau of Statistics of China; a reading below 50 indicates contraction. The new orders index also fell to 49.4%, down 1.1 percentage points, while the production index dropped to 49.8%, down 1.9 percentage points. These readings point to weakness in industrial activity and new orders during the month, but do not establish the cause of LG H&H's sales decline, which the company attributed in China to restructuring its online business. In services, the non-manufacturing business activity index was 49.7%, while the services activity index came in at 50.0% after falling 0.2 percentage points from September, the bureau said.
Attention in China is turning to the October consumer price index report, which the National Bureau of Statistics is scheduled to release on November 9 at 09:30 Beijing time. The official calendar puts the next purchasing managers' index report on November 30 at 09:30 Beijing time. The two release dates will allow prices and economic activity indicators to be monitored after the official October readings. The data follow a manufacturing index reading of 49.3% and a services activity index reading of 50.0% for the same month. The report does not give a date for China's next trade data, leaving the consumer price index and the subsequent purchasing managers' index reading as the two main official releases listed on the calendar.