Kolmar Korea and Cosmax, the two contract manufacturers behind much of Korea's cosmetics industry, each posted their best quarter on record as global demand for Korean beauty products pushed more orders their way.
Kolmar Korea's operating profit jumped 50.2 percent from a year earlier to 110.3 billion won ($78 million) in the second quarter, lifted by skincare and sun care orders. Revenue rose 17.9 percent to 861.3 billion won, the company said on Wednesday.
Cosmax reported operating profit of 73.7 billion won, up 21.3 percent, on revenue of 794.9 billion won, up 27.5 percent, it disclosed on Tuesday.
Growing demand for Korean cosmetics abroad has produced a plethora of smaller beauty brands that own a label but no factory, leaving them dependent on contract manufacturers to take products from formulation to production. The second quarter is also a peak period for sunscreen and basic skincare orders ahead of summer.
A Kolmar Korea official attributed the result to indie brands moving into foreign markets.
"Orders increased mainly for skincare and sun care products as more indie brands expanded overseas and the peak sun care season got underway," the official said. "New product launches by global clients also continued, and that helped us achieve our highest-ever quarterly results."
A person inspects a product made at Cosmax, a Korean cosmetic manufacturing company, in an undated photo.COSMAX
Cosmax's domestic operation drove its quarter. Korean revenue rose 23 percent to 518.4 billion won, surpassing 500 billion won in a quarter for the first time, and operating profit there rose 13 percent to 56.4 billion won.
Overseas units supplied the rest of the growth, a sign that beauty companies outside Korea are also placing orders with the two manufacturers. Cosmax's China unit posted revenue of 197.4 billion won, up 33 percent, as Chinese customers increased orders for makeup including cushion compacts, foundation, blush and lipstick.
The company's U.S. subsidiary turned its first quarterly operating profit since it was established in 2013. Revenue there jumped 79 percent to 53.8 billion won.
A Cosmax official said the turnaround followed several years of work on costs.
Kolmar Korea researchers try out color productsKOLMAR KOREA
"The U.S. subsidiary has worked over the past several years to improve management efficiency by reducing fixed costs and expanding its sales network among indie brands on the West Coast," the official said. "Reorders from existing major clients also increased, and both revenue and profitability improved."
Kolmar Korea's China subsidiary recorded revenue of 57.9 billion won, up 16 percent, but operating profit fell 6 percent to 5.7 billion won as costs increased for some makeup products. Makeup accounted for 39 percent of orders at the unit, against 33 percent for sun care and 18 percent for skincare.
"Large orders are expected ahead of Black Friday in the United States, and K-beauty exports continue to grow," Lee Kyo-seok, an analyst at Shinyoung Securities, said. "We expect the strong earnings trend to continue."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
