AMOREPACIFIC Corporation (KRX:090430) sold ₩210.4bn of product in the Americas in the second quarter of 2026. That is 56.5% more than a year earlier. In the same period, South Korean goods entering the United States began facing a 15% tariff under the trade deal struck with the Trump administration.

Those two facts are about to argue with each other, and the argument has not shown up in the reported numbers yet.

Consolidated revenue for the quarter was ₩1,175.9bn. Operating income was ₩117.3bn, a margin of 10.0%. A year earlier the same quarter produced ₩1,005.0bn and ₩73.7bn, a margin of 7.3%. The first half of 2026 delivered ₩2,311.7bn of revenue and ₩244.0bn of operating income, up 11.5% and 27.5%.

One note on perimeters. The Americas figure comes from the company's quarterly release, and the release and the DART consolidated statement do not cover exactly the same set of entities. Treat the ratio of one to the other as approximate. Roughly, the Americas is now something like a sixth of quarterly revenue.

The China Business Has Already Been Replaced

For a decade the bear case on this company was one country. Chinese demand built AMOREPACIFIC and then unbuilt it. Revenue peaked at ₩5,645.4bn in FY2016 and fell to ₩3,674.0bn by FY2023, a 35% decline.

The replacement is now measurable at the national level. Korea's cosmetics exports hit a record $11.43bn in 2025 and reached about $7bn in the first half of 2026, up 27.3%. The United States became the largest destination, at roughly $2.2bn and up 15.1%. China fell 19%, to about $2bn.

So the market that mattered has changed. Korea overtook the United States in 2025 to become the world's second-largest cosmetics exporter, behind France.

AMOREPACIFIC's own recovery tracks that shift. FY2025 revenue was ₩4,252.8bn, up from the FY2023 trough. Growth is coming from the Americas, from EMEA, and from Japan, on Amazon and TikTok Shop rather than from Chinese duty-free channels.

A 15% Tariff Meets A 72% Gross Margin

Here is why I would not panic about the duty, at least not first.

Gross margin was 72.3% in FY2025. That is barely below the 74.8% of FY2016, and it has held through a revenue decline of a quarter. Cost of revenue was ₩1,176.7bn on ₩4,252.8bn of sales.

A US import tariff applies to customs value, not to the retail price. For a company whose manufacturing cost is under 30% of what it sells for, the base the duty attaches to is small relative to the price on the shelf. Fifteen percent of a low number is a smaller problem than 15% of a high one.

That is arithmetic, not a forecast. The company has not disclosed how much of its US sales is imported from Korea versus made elsewhere, and it has not said whether it plans to raise prices, absorb the cost, or push it onto distributors. I would rather say that plainly than guess.

What the gross margin does tell you is that AMOREPACIFIC has room to absorb a hit that a low-margin exporter would not. Whether it chooses to use that room is a decision, and decisions show up late.

The Margin Problem Was Never About Gross Profit

Now the harder part of this company.

FY2016: revenue ₩5,645.4bn, gross profit ₩4,220.7bn, SG&A ₩3,372.6bn, operating income ₩848.1bn. Operating margin 15.0%.

FY2025: revenue ₩4,252.8bn, gross profit ₩3,076.1bn, SG&A ₩2,740.2bn, operating income ₩335.8bn. Operating margin 7.9%.

Gross margin gave up 2.5 points across a decade. Operating margin gave up 7.1. The difference is entirely SG&A.

Revenue is down 24.7% from the peak. SG&A is down 18.7%. That gap, compounded over nine years, is the whole story of why a company with an intact 72% gross margin earns less than half the operating profit it used to.

To get back to a 15% operating margin on today's revenue, SG&A would have to come down by roughly ₩300bn. Nothing in the recent trend suggests that is happening. SG&A in the second quarter was ₩754.2bn, up from ₩656.2bn a year earlier, which is faster than revenue grew.

Marketing spend in beauty is not waste. Amazon and TikTok are pay-to-play channels, and the Americas growth was bought with some of that money. But an investor should understand that the operating leverage story here is thinner than the revenue story.

COSRX Is What Bought The US Position

Intangible assets were ₩340.7bn at the end of FY2023. A year later they were ₩1,773.9bn. That step is the COSRX acquisition, and COSRX is the brand doing the work in the West. It ranked among the top sellers on Amazon Prime Day in the US and Europe, and was number one in Amazon Beauty in Germany and the UK.

The FY2024 income statement deserves a warning label because of it. Operating income that year was ₩220.5bn. Pretax income was ₩620.8bn. Income tax expense was ₩19.2bn, an effective rate near 3%. Net income printed ₩601.6bn.

None of that ₩601.6bn was operations. Anyone comparing FY2025 net income of ₩247.3bn against FY2024 and calling it a collapse has misread the base year.

Intangibles have since drifted down to ₩1,710.2bn at June 30. That is amortisation, not impairment, so far.

What Could Go Wrong

Channel concentration is the first thing. The Americas growth runs through Amazon and TikTok Shop. Both set their own fee structures, both can change search and recommendation rules overnight, and neither gives a brand a direct relationship with the buyer. A 56.5% growth rate that depends on two platforms is not the same asset as a 56.5% growth rate built on shelf space.

Then the tariff, properly considered. Fifteen percent on customs value is survivable. Fifteen percent on customs value plus a distributor that refuses to absorb any of it, plus a competitor manufacturing outside Korea, is a market-share problem rather than a margin problem. K-beauty's price advantage is part of why it won American shelf space.

Seasonality is worth knowing before the fourth quarter arrives. Q4 operating income was ₩52.5bn in 2025 and ₩78.5bn in 2024, both far below the other quarters, and Q4 2024 produced a net loss of ₩46.2bn. The company books year-end costs into that quarter. Expect it.

And China has not stopped falling. Nothing in the current numbers suggests it has stabilised, only that it now matters less.

The shares closed at ₩142,500 on September 3. The company's market capitalisation was ₩8.3 trillion at Thursday's close, against total equity of ₩5,631.7bn in June. That is roughly 1.5 times book, for a business earning a 10% operating margin.

What Would Settle It

The third-quarter release is the first one where a full quarter of tariff cost could appear. Look at gross margin. If it holds near 72%, the duty is being pushed downstream or absorbed by mix. If it drops two points, the company is eating it.

Second, watch SG&A as a percentage of revenue. That single ratio decides whether the Americas growth turns into profit or just into more spending.

Third, watch the Americas revenue line itself in the fourth quarter, against a much harder comparison. A 56.5% growth rate is not a run rate. What it becomes when the base catches up is the number that matters.