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4Q25 review: Big bath

For 4Q25, LG H&H reported revenue of W1.47tr (-9% YoY) and an operating loss of W72.7bn (swinging to red; -W116.1bn YoY), sharply missing the consensus. The company booked significant one-off expenses related to business efficiency measures (including voluntary retirement programs and restructuring in China) totaling approximately W85bn. The performance was also weak from an operating standpoint, with revenue continuing to decline and the China business remaining in the red.

The cosmetics business was the largest drag on overall earnings, with revenue of W566.3bn (-18% YoY) and an operating loss of W81.4bn (swinging to red). As part of its cosmetics restructuring plan, LG H&H has been aggressively cutting duty-free channel inventory since 3Q25, with duty-free revenue―which had previously been at the W100bn level―shrinking sharply to the W30-40bn range. The company plans to continue these adjustments through 1H26. The Chinese cosmetics business saw revenue fall 18% YoY and appears to have remained in the red.

Looking at revenue by region across all categories (including home care & daily beauty), North America and Japan continued to grow (+8% and +6% YoY, respectively). However, due to weakness in China, total overseas revenue declined to W584.4bn (-5% YoY).

The home care & daily beauty division posted revenue of W523bn (+3% YoY) and operating profit of W18.7bn (-6% YoY). Excluding one-off costs related to efficiency measures, operating profit would have been W25bn, increasing YoY. Key brands such as Dr. Groot and Euthymol delivered strong growth, driven primarily by overseas demand.

The beverage division posted revenue of W383.5bn (-7% YoY) and an operating loss of W9.9bn (swinging to red). Excluding one-off costs, operating profit would have improved to W25bn (similar to the home care & daily beauty division). That said, the decline in revenue is disappointing. The business was affected by a seasonal slowdown in beverage consumption and year-end channel inventory adjustments.