[Asia Economy Reporter Kum Bo-ryeong] An analysis has emerged that Nongshim recorded operating results in the fourth quarter of last year that met market expectations.
According to Hi Investment & Securities on the 9th, Nongshim's consolidated performance last year showed sales of 597.3 billion KRW and operating profit of 20.4 billion KRW. Sales increased by 4% compared to the previous year, while operating profit decreased by 21.3%. Lee Kyung-shin, a researcher at Hi Investment & Securities, explained, "Considering the additional costs of 5.3 billion KRW in cost and welfare expenses in the fourth quarter of last year, the operating results are judged to be at a level that does not significantly deviate from expectations."
In the domestic ramen sector, consumption decreased by 2% compared to the previous year due to the high base in the same period last year and weather effects, but the volume of Nongshim products showed a relatively steady trend. The researcher said, "Recently, the domestic ramen market lacks major new products, which is a phase where existing products gain strength, which is positive for Nongshim," adding, "Therefore, even if the increased cost level due to rising competition costs, labor costs, and logistics costs continues partially, if marketing centered on main brands leads to improved loyalty of main products, it is likely to have a positive effect on operating results."
The snack sector maintains a market dominance of about 31%. The trend centered on extension products of main brands is expected to continue steadily for the time being.
By region, in the United States, the expansion of coverage in the southern and central regions was significant for operating results. Considering the Canadian sales corporation, which is likely to be established within this year, the second U.S. plant, expected to be completed next year, is anticipated to play an important role in expanding the product lineup and market expansion into North America and Central and South America.
The researcher said, "China has been continuously seeking recovery through expansion in the western inland region and opening sales offices since the Terminal High Altitude Area Defense (THAAD) issue," adding, "However, considering the possibility that logistics restrictions due to the recent novel coronavirus infection (Wuhan pneumonia) issue may be reflected in operating results, it is necessary to monitor future trends."
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