LG Household & Health Care plunges 12% after third-quarter earnings shock [Stock NOW]

[Financial News] LG Household & Health Care is plunging 12% after third-quarter results fell short of market expectations and brokerages repeatedly lowered their forecasts.
As of 10:41 a.m. on the 4th, LG Household & Health Care was trading at 229,500 won, down 32,500 won (12.40%) from the previous trading day. The stock opened at 255,000 won and fell as low as 227,500 won during the session.
The results announced the previous day came in well below market expectations, apparently dampening investor sentiment. On a consolidated basis, LG Household & Health Care reported third-quarter revenue of 1.5774 trillion won, down 0.2% from a year earlier, and operating profit of 70.4 billion won, up 52.4%. Operating profit was 30.5% below the market forecast of 101.3 billion won. Net income fell 45.3% to 12.8 billion won.
Weakness in its core beauty business affected the results. Revenue in the beauty division fell 0.3% year on year to 660.8 billion won, and it posted an operating loss of 10.9 billion won. Duty-free sales recovered, but sales in China declined 21.1%, partly due to a restructuring of its online business. Sales in North America also fell 12.5%, partly reflecting the sale of Avon.
The Home Care & Daily Beauty division, the household goods business, reported revenue of 419.2 billion won and operating profit of 31 billion won. Revenue increased 3.8%, but operating profit declined 3.1% as marketing expenses rose. The Refreshment division, the beverage business, posted revenue of 497.4 billion won, down 3.1%, and operating profit of 50.3 billion won, down 19.9%, amid weak domestic consumption, rising raw material costs and promotional competition.
After the results were announced, brokerages successively lowered their target prices and investment ratings for LG Household & Health Care. Hana Securities downgraded its rating from “Buy” to “Neutral” and cut its target price from 320,000 won to 270,000 won. Kiwoom Securities also lowered its rating from “Buy” to “Market Perform” and reduced its target price from 330,000 won to 280,000 won. Meritz Securities cut its target price by 14% to 320,000 won. 

[email protected] Lee Jeong-hwa Reporter