S.Korea's AmorePacific profit plunges as China row hits duty-free sales

AmorePacific Holdings

26/07/2017 09:22

SEOUL, July 26 (Reuters) - AmorePacific Corp  090430.KS , 
South Korea's biggest cosmetic company, reported a 58 percent 
slump in operating profit in the second quarter on Wednesday, as 
the once investor-darling bore the brunt of diplomatic tensions 
with China that dampened demand from Chinese tourists. 
    Chinese visitors, the largest population of the total 
tourists to South Korea, fell 66 percent in June from a year 
earlier, resulting in a significant plunge in the number of 
customers to domestic duty-free shops. 
    Since mid-March, Beijing has banned travel agencies from 
selling trips to South Korea following Seoul's decision to 
deploy a U.S. missile system to counter North Korean threats, 
despite China's objections. 
    "Cosmetic giants such as AmorePacific tend to rely on 
profits produced from duty-free stores," said Cho Yong-sun, an 
analyst at HMC Investment Securities. 
    AmorePacific reported an operating profit of 102 billion won 
 ($91.13 million) in the second quarter of this year, compared 
with 241 billion won a year earlier and analysts' consensus of 
138 billion won. 
    LG Household & Healthcare Ltd  051900.KS , AmorePacific's 
rival firm, on Monday reported a 7.3 percent rise in first-half 
operating profit at 492 billion won. Its reliance on duty-free 
shops is relatively small compared to AmorePacific's. 
    LG Household & Healthcare also has diversified businesses, 
including beverage and household goods, helping it offset 
slowing sales in the cosmetics goods, Cho said. 
 ($1 = 1,119.3400 won) 
 
 (Reporting by Haejin Choi; Editing by Hyunjoo Jin and Gopakumar 
Warrier) 
 ((Haejin.Choi@thomsonreuters.com;)) 
 
Keywords: AMOREPACIFIC RESULTS/