K-Beauty ODM Giants Hit by Profit Pressure Despite Market Growth
Creatrip Team
4 months ago
Cosmax and Korea Kolmar, the two leading cosmetics ODM (original design manufacturer) firms driving the global K-beauty boom, saw stock prices fall about 40% from their peaks after weaker-than-expected Q3 results. Although Cosmax’s sales rose 10.5% year-on-year to KRW 585.6 billion, operating profit dipped 1.6%, while Korea Kolmar missed market profit hopes despite revenue growth. The decline stems paradoxically from K-beauty’s own expansion: many indie brands (small, trend-driven beauty brands) using SNS to reach young overseas consumers have multiplied, spreading orders across more ODMs and reducing large-volume contracts. Mid-tier ODMs have grown faster, benefiting from small-batch, multi-product production and lifting their margins. Both Cosmax and Korea Kolmar invested to win indie clients, lowering short-term profitability; overseas units, especially U.S. subsidiaries, also posted losses. Firms expect a seasonal recovery in Q4 (year-end shopping season), but U.S. business improvement may take longer.
