South Korean cosmetics company AmorePacific has reported a -58% fall in operating profit and a -16.5% drop in sales in Q2 2017, compared to the same period in 2016. Net profit plummeted by -59.8% year-on-year.
Operating profit was KW101.6 billion (US$91.13 million) compared to KW240.6 billion in Q2 2016 and sales amounted to KW1,205 billion (US$1.1 billion).
The company said revenue and profitability decreased for its South Korean business, including duty free stores, due to a decline in the number of foreign tourists.
Chinese visitor numbers have fallen dramatically since mid-March because of the well documented THAAD anti-missile dispute between South Korea and China.
On 15 March China imposed a ban on group tours to South Korea, leading to a -40% year-on-year fall in Chinese arrivals in March, a -66.6% decline in April, and a -64.1% decrease in May.
“Revenue decreased for key luxury brands [such as Sulwhasoo and Hera] from a slowdown in the duty free channel,” said AmorePacific in a statement.
“Revenue for premium brands [Laneige, Mamonde etc] decreased due to a decline in number of tourists affecting key commercial areas and the duty free channel.”
The company said the slowdown in sales growth in Asia was a result of “geopolitical uncertainties”, while revenue and profit in North America declined as a result of increased investment in brands and channel portfolio restructuring.
In Europe, sales and profit fell due to the termination of the Lolita Lempicka licence, said AmorePacific.