K-Beauty ODM Giants Hit by Profit Pressure Despite Market Growth
Creatrip Team
10 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.
