Exterior of Hanssem's Ulsan store [Hanssem]
Exterior of Hanssem's Ulsan store [Hanssem]

South Korea's two largest furniture companies, Hanssem and Hyundai Livart Furniture, both posted strong second-quarter earnings amid a prolonged construction slump and persistent uncertainty in the housing market. Hanssem drove operating profit to nearly five times its year-earlier level by targeting remodeling demand, while Hyundai Livart Furniture improved its bottom line through cost cuts. Analysts say the results reflect a strategy of prioritizing profitability over revenue growth at a time when a broader industry recovery has yet to take hold.

Hanssem lifts operating profit fivefold

Hanssem posted second-quarter sales of 417.2 billion won ($295 million) and operating profit of 11.3 billion won, the company said Wednesday. Operating profit surged 400 percent from a year earlier. The result extended Hanssem's streak of consecutive profitable quarters to 13, including the second quarter — traditionally the interior industry's slow season.

The remodeling business drove the improvement. Sales at Hanssem's Rehouse division rose 13 percent year on year in the second quarter, buoyed by growing demand for apartment transactions and renovation work, with kitchen, bathroom and storage products all performing well.

Particularly effective was the company's push into higher-end products. Combined second-quarter sales of its premium kitchen lines — Kitchen Bach and Euro Kitchen — climbed 40 percent from a year earlier. Sales of the bathroom solution Easy Bath 5 in June were up 80 percent from February, the month of its launch. The storage furniture line Signature grew 12 percent, and the Swive sofa series, including the Swive the Master, rose 46 percent.

Hanssem also restructured its online and offline distribution channels around profitability. Refocusing its Hanssem Mall platform on private-brand products helped push first-half online sales up 20 percent year on year. Offline, the company closed underperforming stores while renovating or opening new locations in prime retail areas to improve efficiency.

[Image generated using ChatGPT]
[Image generated using ChatGPT]

Hyundai Livart Furniture defends profitability

Hyundai Livart Furniture also grew second-quarter operating profit despite a drop in revenue. Sales fell 9 percent year on year to 373.1 billion won, but operating profit rose 9.4 percent to 5.6 billion won.

The construction and housing downturn weighed on revenue across the board. Second-quarter furniture segment sales fell 17.7 percent year on year to 203.1 billion won. Business-to-consumer furniture sales declined 11 percent to 70.6 billion won, while business-to-business furniture sales dropped 15.2 percent to 112.2 billion won. Raw materials segment sales also fell 42 percent to 20.4 billion won.

"Weakening consumer sentiment weighed on the B2C furniture business, while a decline in move-in volumes due to the construction slump and a deteriorating domestic business environment added pressure to the B2B furniture segment," a Hyundai Livart Furniture official said. Growth in B2B interior project sales, however, helped offset those headwinds.

Cost cuts were the main driver of the operating profit improvement. Selling and administrative expenses fell 15.1 percent year on year to 58 billion won in the second quarter, from 68.4 billion won a year earlier, with reductions in commissions, logistics costs and advertising spending. The company said the revenue decline weighed on operating profit by about 6.6 billion won, but cost reductions delivered a 10.4 billion won improvement.

With the furniture industry's downturn showing no signs of ending, both companies are expected to keep focusing on profitability rather than aggressive revenue growth for now. "Given persistent uncertainties in the housing market and rising raw material and freight costs, we will continue targeting the relatively resilient B2C demand in the remodeling segment," a Hanssem official said.


boo@heraldcorp.com