[Company analysis] Celltrion Skincure Co., Ltd. (셀트리온 스킨큐어)

「Celltrion Skincure Co., Ltd.(셀트리온 스킨큐어)」is a cosmetics company affiliated with 「Celltrion(셀트리온)」, a comprehensive biotechnology company in South Korea. Their parent company, Celltrion, started this business, expecting utilization of biotechnology that they already have, but they are now struggled with the unexpected market situation. This company have not been able to generate operating income for seven years from 2013, and eventually it is in a phase of business reduction. The number of connected employees is approximately 117.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is KRW 10 million, as of 2019

Company name	Celltrion Skincure Co.,Ltd.
Company name (Korean)	셀트리온 스킨큐어
Date of establishment	2000년6월14일
Headquarters location	서울특별시 서초구 강남대로 601, 7층
Capital	883
Consolidated sales	39,950
Consolidated operating profit	(12,980)
Consolidated total assets	802,349
Consolidated capital	545,623
Capital adequacy ratio	68.0%
Consolidated number of employees	117

 

 

 

2. Summary and Features

 
In March 2013,「Celltrion」purchased「Hanskin (한스킨)」, a cosmetics company famous for BB cream. Since then, they established a new cosmetic material development laboratory under the umbrella of the Life Science Research Institute of Celltrion. And it has been working on the development of new cosmetic materials that apply biotechnology. In 2015, they changed the company name to「Celltrion Skincure (셀트리온 스킨큐어)」and started to expand the cosmetics business. In order to incease the business scale, they actively hired new employees, and in March 2017, they hired 181 people in sales positions alone.

 

Because the parent company,「Celltrion」has the technical capabilities it has accumulated in the bio business, 「Celltrion Skin Cure」had considerable advantages in the development of functional cosmetics. In addition, based on the global network that「Celltrion Healthcare(셀트리온 헬스케어)」has built up in the biopharmaceutical division, they were able to easily develop overseas markets. Nevertheless, they have not been able to generate operating income for consecutive seven years since 2013, when they started full-scale business. In 2017, it recorded an operating loss of KRW 36.2 billion, which is the largest ever, and eventually the business began to shrink.

The reason why the「Certrion Skin Cure」, which was predicted to become a cash cow, fell down is considered as its failure in product positioning. Recently, the Korean domestic cosmetics market has been divided into high-end brands and low-cost brands with good cost performance. However,「Certrion Skin Cure」was unable to concentrate its marketing capability on either side. In addition, it is said that one of the causes is that the market conditions in Korea have deteriorated due to the "THAAD missile problem" that started in earnest in 2017.

After all, in order to reduce SG&A expenses, they started to reduce the number of employees drastically, and as of 2020, only 5 people remained as salespersons of「Certrion Skin Cure」including part-time workers. In 2019, sales of offline stores such as department stores and duty-free shops was decreased significantly, but instead sales of online stores and global business was increased. As a result, sales have increased by about 1.3 billion and SG&A expenses have been reduced by about 2.7 billion. Compared to the previous year, operating income improved by approximately 4.2 billion KRW.

 

 

 

3. Major Business

 

■ Manufacturing and sales of cosmetics

 

 

 

4. Financial information

 

※Unit is KRW 10 million

		2017	2018	2019
Consolidated sales		52,679	38,690	39,950
Consolidated operating profits		-36,164	-17,211	-12,980
Consolidated total assets		932,791	939,770	802,349
Consolidated net assets		646,365	661,777	545,623
Breakdown of sales	Cosmeticsbusiness	52,628	38,580	39,237
	Others	51	111	714