Hanssem and Hyundai LIVART, major domestic furniture makers, both saw sales decline but increased operating profit in the second quarter this year. With demand for new furniture weakened by a slump in the market for dwellings, Hanssem boosted remodeling and premium product sales, while Hyundai LIVART focused on expense efficiency, such as cutting selling and administrative expenses, to defend profitability.
According to the industry on the 12th, Hanssem's second-quarter sales this year were 417.2 billion won, down 9.2% from a year earlier. In contrast, operating profit was 11.3 billion won, up about 400% over the same period. Cumulative sales for the first half were 816.7 billion won, down 9.6% from a year earlier, but operating profit rose 145.6% to 21.4 billion won.
Hanssem's profitability improved on the back of its business-to-consumer (B2C) remodeling business. Second-quarter sales of Hanssem's "Rehouse" rose 13% from a year earlier. As transactions of existing apartments and demand for renovations continued, sales of core products such as kitchens, bathrooms, and storage increased.
In particular, sales of high-priced, premium products expanded. Combined second-quarter sales of the premium kitchen brands "Kitchenbach" and "Euro Kitchen" increased 40% from a year earlier. Sales of the storage furniture line "Signature" rose 12%, and sales of the Suive sofa series climbed 46%. Rather than expanding scale, increasing sales of core products with higher profitability appears to have widened the improvement in earnings.
Online sales also grew. Hanssem reorganized Hanssem Mall around its private brand (PB) and strengthened services so that offline products can also be explored online. In the first half of this year, Hanssem Mall's sales rose 20% from a year earlier. Hanssem is continuing to improve its business structure by expanding premium products, streamlining distribution channels, and focusing marketing on core products.
Hyundai LIVART also saw its top line decline, but its second-quarter profitability improved. Hyundai LIVART's second-quarter sales were 373.1 billion won, down 9% from a year earlier. Operating profit was 5.6 billion won, up 9.4%.
Sales fell as volumes of built-in furniture supplied to new apartments and the like decreased, but this was offset by expense reductions. Hyundai LIVART's second-quarter selling and administrative expenses were 58 billion won, down 15.1% from a year earlier. The ratio of SG&A to sales also fell to 15.5% from 16.6%.
Along with the sales decline, the burden of sales commissions eased, and logistics and advertising expenses also decreased. Hyundai LIVART is simultaneously pursuing companywide cost improvements and managing order costs in its built-in business.
However, looking at the first half as a whole, Hyundai LIVART has not yet fully emerged from its slump. First-half sales were 729.1 billion won, down about 14% from a year earlier, and operating profit fell 54.7% to 6.6 billion won. That is because first-quarter operating profit stayed around 1 billion won.
◇ Fewer new homes and more transactions of existing dwellings… mixed furniture demand
The performance gap between the two companies stems from the flow of the housing market and their business structures. In the first half of this year, nationwide dwelling completions were 103,735 units, down 49.5% from a year earlier. In contrast, sales transactions of dwellings in the Seoul metropolitan area increased 13.4% over the same period. While supply of new apartments fell sharply, transactions of existing dwellings relatively picked up.
Accordingly, Hanssem, whose business heavily targets interiors and remodeling for existing dwellings, benefited, whereas Hyundai LIVART, which has a high share of business-to-business (B2B) operations such as built-in furniture linked to new move-ins, was relatively more affected by the slump in the construction market.
It is expected to take time for a full recovery in the furniture industry. KDI projected construction investment would increase only 0.1% this year and 1.1% in 2027. Given the steep drop in first-half dwelling completions, demand for built-in and special-order furniture linked to new apartment move-ins is likely to remain sluggish for the time being.
An industry official said, "Even if housing starts recover, there is a time lag until completion, occupancy, and furniture supply, so for B2B furniture makers, performance will likely recover gradually," adding, "Furniture companies are expected to continue strategies to improve profitability by expanding remodeling and premium products, online channels, and expense efficiency while waiting for a recovery in the market for new dwellings."