[Edaily Reporter KYUNG GYEYOUNG ] AMOREPACIFIC CORPORATION and LG H&H, traditional powerhouses of K-Beauty, are expected to improve their second-quarter profitability as they expand their presence in the North American and European markets. The fact that they are gradually reducing their reliance on the Greater China region—which had previously been a drag on their performance—is also a positive sign.

According to financial information provider FnGuide Inc. on the 26th, AMOREPACIFIC CORPORATION(090430)—which is set to release its preliminary earnings on the 30th—is estimated to report second-quarter revenue of 1.0846 trillion won, a 7.9% increase from the second quarter of last year, and operating profit of 97 billion won, a 31.6% increase from the same period last year, based on consensus estimates (the average of securities firms’ forecasts).

For LG H&H(051900), which is set to announce its earnings on the 29th, the securities industry forecasts that revenue will decline by 2.8% year-over-year to 1.5599 trillion won, while operating profit is expected to rise by 31.7% year-over-year to 72.2 billion won.

The improvement in profitability for both companies is driven by the global popularity of K-Beauty, which has expanded into markets such as North America and Europe. According to import-export trade statistics from the Korea Customs Service, cosmetics exports in the first half of this year reached $5.72814 billion—a 25.1% increase from the same period last year—setting a new record high since 2000. Although exports to China fell by about 5% year-over-year to $849.56 million, exports to the United States alone totaled $1.11207 billion, and exports to the United Kingdom surged by 130% to $195.08 million, offsetting the slump in the Greater China region. K-Beauty’s export success is expected to drive growth for AMOREPACIFIC CORPORATION and LG H&H.

AMOREPACIFIC CORPORATION is achieving success by expanding into markets such as North America and Europe. During Amazon’s Prime Day event held at the end of last month, AMOREPACIFIC CORPORATION recorded its highest-ever sales, with revenue increasing by 20% in North America and 22% in Europe compared to last year’s event. Not only well-known brands such as Laneige, COSRX, Ilyoon, and Estra, but also Mise-en-Scène, Etude, and Labo H entered the sales rankings, demonstrating balanced growth.

Ha Hee-ji, an analyst at HYUNDAI MOTOR SECURITIES, noted, “Although sales are expected to decline as the Chinese subsidiary reduces the number of Sulwhasoo stores, results are becoming visible, particularly for Ryeo, Laneige, and Estra.” She added, “It is encouraging that sales in the Americas and Europe, the Middle East, and Africa (EMEA) increased by 20% and 41%, respectively, and that brands other than Laneige are growing.”

Although LG H&H’s revenue growth has stalled, the company is undergoing a structural transformation by expanding its portfolio in the North American market, led by Dr. Groot, a functional shampoo for hair loss. The burden is also expected to ease as efforts to streamline inventory in the duty-free channel—which had led to deteriorating profitability—enter their final stages. Park Jong-dae, an analyst at Hana Securities, noted, “For the cosmetics division, North American sales are expected to grow by about 30% during the same period, bringing overall sales back to growth for the first time in five quarters.”