Why Cosmax Can Smile Despite Slowing Profitability

[Korea Financial Times, Yang Hyunwoo] Cosmax remains unfazed despite sluggish profitability. Although profits declined due to increased initial investment costs for domestic indie brands, the company views this as an investment for the future. Moreover, major overseas operations in China, the U.S., and Thailand continue to grow, offsetting the domestic performance slowdown.

According to the industry on November 13, Cosmax recorded consolidated revenue of KRW 585.6 billion in the third quarter of 2025. This represents a 10.5% increase compared to the same period in 2024. However, operating profit during this period decreased 1.6% year-over-year to KRW 42.7 billion.

Profits declined significantly in the domestic segment. Cosmax's domestic operations posted an operating profit of KRW 34.3 billion in Q3 2025, down 13% year-over-year. Revenue during the same period increased 10.4% to KRW 383.5 billion.
Cosmax attributed the operating profit decline to an increase in indie brand clients. A company official explained, "Indie brands incur initial service costs but generate no immediate revenue, which affects profitability. However, given that indie brands are leading K-beauty's growth momentum, this shouldn't be viewed negatively if seen as a potential revenue source."

According to statistics from the Ministry of SMEs and Startups, cosmetics exports by large companies in the first half of 2025 decreased 23% compared to the same period in 2024. In contrast, medium-sized companies saw exports increase 16.3%, while small and medium enterprises recorded a 30.8% rise, achieving their best performance ever. In essence, indie brands have established themselves as the growth axis for Korean cosmetics exports.

In contrast to the somewhat disappointing domestic business, overseas operations are sailing smoothly. Cosmax's China operations recorded consolidated revenue of KRW 140 billion in Q3 2025, up 22% year-over-year. Specifically, the Shanghai subsidiary benefited from increased launches of new color cosmetics products and strong sales of major brand skincare products. The Guangzhou subsidiary continued its growth by diversifying into exports, offline, and hospital channels.

During the same period, the U.S. subsidiary recorded revenue of KRW 36.9 billion, up 13.6% year-over-year, driven by the effect of new clients acquired at the end of last year. This was further bolstered by a recovery among existing major clients. Revenue increased evenly across both skincare and color cosmetics segments, reducing the deficit.

Among Southeast Asian operations, Thailand is experiencing high growth. The Thai subsidiary's Q3 2025 revenue reached KRW 15.2 billion, up 36.1% year-over-year. The Thai subsidiary contributed to the performance increase by launching its OBM (Original Brand Manufacturing) business in earnest starting in the second half. However, the Indonesian subsidiary saw revenue decline 33.4% year-over-year to KRW 21.5 billion during this period due to unstable local economic conditions and intensified competition with low-priced imported products.

According to the "2024 Global Health Industry Market Size" report published by the Korea Health Industry Development Institute in April 2024, Korea's cosmetics market size stands at KRW 17.3412 trillion. In contrast, the global cosmetics market size is KRW 517 trillion, of which the U.S. accounts for KRW 141 trillion and China for KRW 104 trillion. This is why Cosmax can smile despite domestic profitability deterioration, thanks to global growth momentum.

Oh Rin-ah, an analyst at LS Securities, noted, "China operations have passed the bottom and are showing a gradual recovery, while in the U.S., the trend of growth and loss reduction is expected to continue due to the influx of new clients following the western subsidiary's operations."

A Cosmax official stated, "We will further solidify our position as the global number one ODM (Original Design Manufacturing) company by strengthening competitiveness in high-value-added products including suncare, and through region-specific business strategies."

Yang Hyunwoo (yhw@fntimes.com)