Able C&C, the parent of South Korea’s first-generation low-priced cosmetics brand Missha, has swung to the black after years of net losses as the company’s overseas sales have increased. Seoul-based IMM Private Equity, which had planned to dump Able’s management rights at half its purchase price, will hold out for a higher selling price, banking sources said on Monday.
The cosmetics products maker posted 1.1 billion won ($835,155) in net profit last year, after net losses for five consecutive years. It had 43.4 billion won and 97.8 billion won losses in 2021 and 2020, respectively, according to its financial disclosure.
The company logged 3.7 billion won in net profit for the first quarter of this year, compared with a 502.8 million won net loss in the same period last year. January-March revenue reached 63.1 billion won, up 11.1% from the same period of the last year.
The company has focused on enhancing business stability and cost structure, an Able official said. As a result, its overseas sales – primarily in Japan and the US – reached nearly 60% of annual revenue, the official added.
OVERSEAS MARKETS
Able has undergone strong restructuring since IMM acquired the cosmetics company in 2017. The private equity firm has improved Able’s financial structure by reorganizing and combining the subsidiaries’ businesses, as well as reducing the number of stores in Korea from 471 at end-2020 to 286 as of June 2023.
Missha's skincare products (Courtesy of Able C&C)
The beauty products company has also expanded its overseas sales since the acquisition. Exports, which made up 20% of its 2018 revenue, increased to more than 50% in 2022 and to 58.3% in the first quarter of this year.
Missha’s flagship products, such as BB Cream and Time Revolution Night Repair Ampoule, are popular on Amazon.com and Japan’s beauty content channel MimiTV.
SALE PROCESS
IMM, which holds 61.5% of Able, began the sale process last year after selecting Credit Suisse as the deal manager.
The private equity firm accelerated the procedure as a sharp decline in Chinese tourists to Korea heavily impacted local cosmetics companies, after China slashed trade with Korea in retaliation for Seoul’s announcement to deploy a US-made Terminal High Altitude Area Defense System (THAAD) in 2016.
The investment firm will slow the pace of the sale procedure as Able’s performance improves, sources said. IMM conducted a preliminary bid in March of this year and selected several companies as potential buyers, including a Korean mid-sized cosmetics maker and overseas beauty products manufacturers and distributors, the sources added.
IMM’s lenders, such as Korea’s Credit Union, Shinhan Bank, Shinhan Investment & Securities Co., NongHyup Bank and China Construction Bank Corp., led in putting up Able for sale, according to sources. The group of lenders has reportedly decided to take time to achieve a higher selling price rather than rush to dump Able’s stocks at a low valuation.
Missha led the huge popularity of Korea’s affordable beauty products in the early 2000s. A’pieu and Chogongjin are also among Able’s skincare and makeup brands.
In the early 2010s, the company ranked third in the local cosmetics industry by revenue, behind Amorepacific Corp. and LG H&H Co. Since the mid-2010s, however, it has struggled with intensifying competition and China’s restrictions on trade with Korea.
