After posting record revenue in 2021, South Korea’s LG Household & Health Care (051900.KS) saw its top line shrink by more than 20% over four years. Now, the company is staging a full-fledged earnings recovery led by a rebound in its cosmetics business. Following a return to revenue growth in the second quarter—the first in six quarters—analysts expect annual revenue to resume its upward trajectory. The company is also accelerating a “select and focus” strategy centered on its core brands while restructuring its cosmetics portfolio.

According to financial data provider FnGuide on August 25, consensus estimates for LG Household & Health Care’s full-year results stand at revenue of 6.46 trillion won (approximately $4.7 billion) and operating profit of 379.6 billion won (approximately $274.1 million). That represents year-over-year increases of 1.7% in revenue and 122.4% in operating profit. Net income, which was a loss of 85.8 billion won (approximately $61.9 million) last year, is projected to swing to a profit of 242.2 billion won (approximately $174.9 million) this year.

LG Household & Health Care posted record results in 2021 with revenue of 8.09 trillion won (approximately $5.8 billion) and operating profit of 1.29 trillion won (approximately $931.1 million). At that point, revenue and operating profit had grown for 17 consecutive years. But revenue subsequently declined to 7.19 trillion won (approximately $5.2 billion) in 2022 and 6.8 trillion won (approximately $4.9 billion) in 2023. In 2024, revenue edged up 0.1% to 6.81 trillion won (approximately $4.9 billion), only to fall 6.7% to 6.36 trillion won (approximately $4.6 billion) last year. Over the four-year span, revenue contracted 21.5%.

The primary driver of the sharp contraction was weakness in the company’s core cosmetics business. LG Household & Health Care had previously ridden high growth in China and South Korea’s duty-free channels on the strength of luxury brands such as The History of Whoo. But in 2022, China’s COVID-19 lockdowns, economic slowdown, and weakening consumption simultaneously rattled cosmetics sales in both China and duty-free outlets.

Even after China’s reopening, the recovery was slow. Chinese demand remained soft through 2023, dragging down sales in key cosmetics channels. Restructuring costs—including workforce and product adjustments aimed at streamlining overseas operations—further eroded profitability.

Since then, LG Household & Health Care has been reshaping its business to reduce dependence on China and duty-free channels. Last year, the company trimmed duty-free supply volumes and reorganized domestic and international distribution channels, which temporarily shrank the top line. Severance costs from voluntary retirement programs added further pressure on profitability.

Cosmetics Rebound and the Rise of North America

This year, the results of those changes are becoming visible. LG Household & Health Care’s second-quarter consolidated revenue rose 3.3% year-over-year to 1.66 trillion won (approximately $1.2 billion), marking the first growth in six quarters. Operating profit jumped 87.5% to 102.8 billion won (approximately $74.2 million).

The cosmetics business led the turnaround. Second-quarter cosmetics revenue increased 3.9% year-over-year to 818.4 billion won (approximately $590.9 million), and the segment swung to an operating profit of 44.4 billion won (approximately $32.1 million) from a loss in the same period last year. North America, in particular, has emerged as a new growth axis to replace China. Second-quarter North America revenue surged 47.3% year-over-year to 205.8 billion won (approximately $148.6 million), surpassing China revenue (176 billion won) for the first time in company history.

LG Household & Health Care is also accelerating its portfolio restructuring by divesting underperforming overseas assets. The company disclosed the previous day that its U.S. subsidiary LG H&H USA has agreed to sell its entire stake in The Avon Company, a direct-selling cosmetics firm, for 8.4 billion won (approximately $6.1 million).

LG Household & Health Care acquired The Avon Company for 145 billion won (approximately $104.7 million) in 2019 to expand its North America business, but the unit’s performance has since deteriorated. Going forward, the company plans to shift the center of gravity of its North America growth strategy toward in-house brands such as Dr. Groot, pursuing a select-and-focus approach.

Return to the “7 Trillion Won Club” Expected by 2028

Securities analysts expect the revenue recovery that began this year to continue. According to FnGuide, consensus estimates for next year stand at revenue of 6.78 trillion won (approximately $4.9 billion) and operating profit of 448.8 billion won (approximately $324.0 million)—up 4.9% and 18.2%, respectively, from this year’s projections. By 2028, revenue is forecast to exceed 7 trillion won (approximately $5.1 billion), marking a return to the “7 trillion won club” for the first time since 2022.

The table below summarizes LG Household & Health Care’s revenue trend over the past five years and future projections.

YearRevenue (100M KRW)Operating Profit (100M KRW)Notes202180,91512,896Record results202271,858-Decline begins202368,048-Weak China demand202468,119-Slight rebound202563,555-858 (net loss)Restructuring reflected2026 (est.)64,6463,796Revenue growth resumes2027 (est.)67,8104,488Recovery continues2028 (est.)70,000+-Return to 7 trillion won club

Note: Years without disclosed operating profit are marked with “-“. For 2025, net loss is shown in place of operating profit.

Orin A, an analyst at LS Securities, said: “Considering the easing base-effect pressure in the cosmetics segment and the growth and improving profitability of the North America business, we believe LG Household & Health Care’s overall earnings trajectory is passing through its trough.”