Kolmar Korea’s record earnings and larger group value are widening the gap with Cosmax
Headquarters building of Kolma Korea.
A market upheaval in the cosmetics Original Design Manufacturing (ODM) industry is beginning in earnest. With Kolmar Korea rising to the ranks of a large business group for the first time in the industry, it appears to be widening the gap with its competitor Cosmax by breaking its record earnings while riding the global K-beauty wave. The market capitalization of Kolmar Group has grown to twice the level of Cosmax Group.
According to the industry on May 22, based on the closing price of the previous day, the combined market capitalization of Kolmar Korea, Kolmar Holdings, HK inno.N, and Kolmar BNH reached 4.0156 trillion won (approximately $2.677 billion). The combined market capitalization of Cosmax Group, including Cosmax, Cosmax BTI, and Cosmax NBT, was tallied at 2.3478 trillion won.
The market capitalization of Kolmar Korea, based on the closing price of the previous day, was 2.1056 trillion won, surpassing Cosmax (2.0032 trillion won). The two companies are considered the core affiliates of each group and the representative ODM companies in the domestic cosmetics industry. ODM refers to a method in which a company directly researches and develops a formulation, and while owning the relevant technology, receives orders from clients and delivers the products.
More than 95% of Kolmar Korea’s cosmetics division revenue falls under this category. Cosmax also supplies more than 90% of its revenue in the form of ODM.
As Kolmar Korea delivered record-breaking earnings in the first quarter of this year following its achievement of the highest-ever performance last year, this is interpreted as expectations being concentrated on future growth. Kolmar Korea recorded 728 billion won in revenue and 78.9 billion won in operating profit in the first quarter of this year. These figures represent an 11% and 65% increase, respectively, compared to the same period last year.
On the other hand, Cosmax received a somewhat disappointing report card in the first quarter of this year. While its revenue recorded 682 billion won, a 16% increase compared to the same period last year, its operating profit only reached 53 billion won, a 3% increase. As the global K-beauty trend expanded with a focus on skincare, the proportion of color cosmetics products, which had maintained high profitability through mass production, decreased, leading to a decline in profitability.
The growth potential of Kolmar Group also stood out at the group level. In the combined market capitalization of group companies, Kolmar Group surpassed Cosmax Group by nearly double. In particular, Kolmar Group focused on raising the overall value of the group by building a three-pronged business structure connecting cosmetics (Kolmar Korea), pharmaceuticals (HK inno.N), and health functional foods (Kolmar BNH). As a result, it is evaluated to have succeeded in establishing a stable business structure.
On the other hand, Cosmax Group concentrated on a growth strategy centered on the cosmetics business. In fact, as of the previous day, Cosmax accounted for about 85% of the group’s total market capitalization.
The fact that the Fair Trade Commission newly designated Kolmar Group as a large business group in April also acted as a favorable factor for the increase in corporate value. Kolmar Group is the first in the cosmetics ODM industry to be included in a large business group.
Choi Mun-hee
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