Hugel Shifts U.S. Distribution to CSO... Q3 Operating Profit Falls, Cumulative Revenue Grows

Third-quarter operating profit down 62%; revenue down 7.9%
Sales of flagship toxin product down 21%; revenue up 15% year to date
"Temporary impact during transition to CSO model"

Hugel’s revenue and operating profit both declined year over year in the third quarter of this year. The company continued to grow in key markets, including South Korea and Europe, but lower sales of its flagship botulinum toxin product weighed on overall results. The transition in the distribution structure of its U.S. business also affected short-term performance. However, revenue for the first three quarters rose 15% year over year, sustaining the company’s growth.

Hugel said on November 4 that, on a consolidated basis, it posted revenue of KRW 97.5 billion, operating profit of KRW 18.1 billion and net income of KRW 4.7 billion in the third quarter. Revenue fell 7.9% year over year, while operating profit and net income declined 61.8% and 87.6%, respectively.

Hugel corporate logo image. Hugel

The slowdown in profitability was more pronounced than the decline in revenue. The operating margin in the third quarter was approximately 18.6%, down 26.2 percentage points from 44.8% a year earlier. Profitability weakened as operating profit fell more sharply than revenue.

By product category, revenue from botulinum toxin totaled KRW 47.2 billion, down 21% year over year. Revenue from fillers and skin boosters was KRW 30.9 billion, up just 2%. Cosmetics and other products grew by more than 25% to KRW 19.4 billion, but this was not enough to offset the decline in toxin sales.

Hugel continued to grow in the South Korean market. Combined third-quarter revenue from toxin, fillers and skin boosters in South Korea was KRW 27.4 billion, up 54% year over year. It has increased every quarter since the third quarter of last year. In Europe and other regions, combined revenue from these products rose 18% to KRW 17.8 billion.

Hugel ranked second in China’s botulinum toxin market, with a 22% market share. In Brazil, it posted its highest-ever quarterly results in the third quarter, marking the first anniversary of its return to the market.

In the United States, the transition from an existing distribution partnership to a CSO (contract sales organization) model temporarily affected results. Hugel plans to strengthen its market leadership and profitability over the medium to long term by establishing a direct-sales operating model in the United States.

For the first three quarters of the year, revenue totaled KRW 352.1 billion, up 15.1% year over year. By contrast, operating profit for the period fell 14.9% to KRW 121.7 billion, while net income declined 15.9% to KRW 90.1 billion.

Hugel plans to expand its business in key overseas markets, including Europe, China and Brazil, building on its strength in South Korea. It will also work to establish a direct-sales operation in the United States and diversify its product portfolio.

Hugel Global CEO Carrie Strom said, "Building on our leading position in South Korea, Hugel continues to expand the foundation for global growth. We have made important progress in establishing a direct-sales operating model in the United States, a key market, and will leverage Letybo's competitiveness to solidify the company's profitability over the medium to long term."

Hugel Korea CEO Jang Doohyun said, "The strong performance of both toxin and fillers in the South Korean market has once again confirmed the solid foundation for growth. We are also continuing to grow in key overseas markets, including Europe, China and Brazil, and will strengthen the competitiveness of our core businesses while working to diversify our product portfolio."

This content was produced with the assistance of AI translation services.