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Financial Analysis Amore Pacifics financials over the post-crisis period, from 2002 to 2004 are summarized as below.

In the new millennium Amore Pacific presented fresh challenged as the domestic market first expanded. Based on the chart, the operation activity likes sales, have increase from 2002 to 2003, but decreased from 2003 to 2004. It is affecting operating income and net income among 2002 to 2004. It affected due to higher operating expense and higher in goods sold. If we see cost of goods sold for 2004, have 32% point, the highest from all over operating margin. It is also implication to the operating profit margin area that need to measuring pricing strategy and operating efficiency. Amore Pacific also has decreased in Asset Turnover Ratio. We get 1.2 in 2002, 1.02 in 2003, and 0.9 in 2004. But if we see the total asset, there is increased 30% in this point, from 2002 to 2004.

Summary Financial (KRW bn)

1500 1000 500 0 Sales Operating Income Net Income Total Asset 2002 2003 2004

Amore Pacific also competed with several international brands like LOreal SA, P&G, Unilever PLC, Shiseido Co. Ltd, and The Estee Lauder Cos Inc. Among this competitor, LOreal SA always becomes market leader as first or second position in global share for hair care, make-up, fragrance and skin care. Many several product have launched by the Amore Pacific and competitors with also several priced. As an important part of the vision for Amore Pacific was to become world-class, this had the implication of forcing it to think internationally. Three countries combined to account for 81% of the international sales in 2004 France with 55%, China with 17%, and United States with 9% and also the rest of greater China Hong Kong represented 12% and Taiwan 6%. From the chart below, France had great sales among the other region, but also France had the minus point for net profit. It indicates that Amore Pacific has expansion cost combined to lead to significant operating losses. Its indicates that Amore Pacific has to Quadrupling production capacity to return to profitability. This condition in France have similar in other region likes China and U.S. Different form three region, in Asia and Hong Kong, Amore Pacific have

gradually good sales and affected to the net profit they get. Over all, the growing popularity of South Korean culture become accelerated apparent success in Asian people.

Sales per Region (KRW bn)

U.S. France 2004 China Hongkong Asia 0 20 40 60 2003 2002 2 1 0 -1 -2 -3 -4 -5 -6

Net Profit per Region (KRW bn)