Amorepacific Shares Slump as Poor Cosmetics Sales in China Weigh

By Kwanwoo Jun

Amorepacific Corp.'s shares slumped Wednesday as poor cosmetics sales in China weighed on earnings.

Shares of the South Korean cosmetics maker slid as much as 25% to 125,000 won ($90.86) early Wednesday, and are on course for their sharpest one-day drop since listing in 2006.

Parent Amorepacific Group also dropped by as much as 18%, while the local stock benchmark Kospi rose 2.3%.

The beauty-product company's selloff reflected downbeat market views over future earnings after its second-quarter operating profit plunged 30% from a year earlier to 4.15 billion won, widely missing street views of more than 60 billion won.

The company attributed the poor quarterly operating profit to a sharp sales decline and ongoing business restructuring in China.

Amorepacific's operations in China are projected to have generated operating loss of 40 billion won--dwarfing profits elsewhere--for the second quarter, Mirae Asset Securities analyst Bae Song-yi said in a research note. Bae added that the company's China losses could widen further in the third quarter due to business restructuring costs in China.

Steady revenue growth in the U.S., with skincare brand Cosrx fully incorporated in May, couldn't offset the sharp revenue decline in China, Bae noted.

Mirae Asset cut its target price for Amorepacific Corp. by 17% to 200,000 won and kept a buy rating on the stock.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

August 07, 2024 01:22 ET (05:22 GMT)

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