1. AU Brands H1 2025 Earnings Analysis: What Happened?

While AU Brands continued its revenue growth, driven by the consistent popularity of Rockfish Weatherwear, operating profit fell short of market expectations. Revenue reached ₩13.8 billion, exceeding projections by 1.47%, but operating profit was only ₩2.5 billion, a significant 35.9% below estimates.

2. Reasons for Declining Profitability: Why These Results?

The primary reasons for the decline in operating profit are overseas subsidiary establishment and investment, coupled with increased marketing expenses. Aggressive global expansion and investment in strengthening DTC strategies have led to short-term profit deterioration. However, there are positive aspects. The KOSDAQ listing significantly improved financial soundness and increased cash and cash equivalents. Furthermore, investment in R&D is bolstering future growth drivers.

3. Investment Strategy: What Should Investors Do?

AU Brands holds strong long-term growth potential, but short-term profitability improvement needs careful monitoring. The investment recommendation is “Neutral”.

  • Positive Factors: Rockfish Weatherwear brand competitiveness, successful online/DTC strategy, global expansion potential, improved financial structure.
  • Negative Factors: Declining operating profit, burden of overseas investment, intensifying market competition, exchange rate volatility.

Future investment strategy should consider profitability improvement trends, securing competitiveness in overseas markets, and the effects of new investments.

4. Action Plan for Investors

If considering investing in AU Brands, develop the following action plan:

  • Monitor Short-Term Profitability Improvement: Continuously monitor cost management efficiency and return on investment.
  • Analyze Overseas Market Entry Strategy: Evaluate customized strategies for each market and the potential for securing local competitiveness.
  • Manage Exchange Rate Volatility Risk: Assess the company’s strategies to mitigate risks associated with exchange rate fluctuations.
  • Analyze the Impact of New Investments and M&A: Evaluate the synergy effects of new business ventures and investments.