SPC Samlip's Q2 Earnings Disappoint... Doubts Over Improvement in Second Half

[Asia Economy Reporter Song Hwajeong] SPC Samlip recorded poor performance in the second quarter of this year, and it is expected that improvement in the second half will not be easy.

According to the Financial Supervisory Service's electronic disclosure system on the 8th, SPC Samlip posted an operating profit of 9.291 billion KRW on a consolidated basis in the second quarter. This is a 44% decrease compared to the same period last year. Sales increased by 0.1% to 618.989 billion KRW, but a net loss of 19.26 billion KRW was recorded, turning to a deficit.

Researcher Son Hyoju of Hanwha Investment & Securities analyzed, "Due to weakened business-to-business (B2B) demand and school reopening demand caused by COVID-19, the company recorded poor performance falling short of the market consensus operating profit of 13.4 billion KRW," adding, "The recently imposed Fair Trade Commission fine of 29.1 billion KRW and additional tax of 3.2 billion KRW from a regular tax audit were reflected at once, resulting in a net loss attributable to controlling shareholders of 19.3 billion KRW."

By business division, the bakery division recorded sales of 150.2 billion KRW, up 3.7%, and operating profit of 7.4 billion KRW, down 30%. The food division's sales increased by 9.5% to 153.4 billion KRW, but it recorded an operating loss of 1.5 billion KRW, turning to a deficit.

Researcher Jo Mijin of NH Investment & Securities explained, "Due to delayed school openings and restrictions on outdoor activities, not only sales at rest areas and stores but also the bakery business, which is the cash cow, experienced overall weakness in the B2B channel," adding, "Initial marketing costs were also incurred due to the launch of the new brand 'Eggslut.'"

It is difficult to guarantee a recovery in performance in the second half as well. Researcher Han Yujeong of Daishin Securities said, "Traffic in the rest area sector, which was hit hard by COVID-19, has been recovering significantly since hitting the bottom in March-April, but the unfavorable business conditions in the bakery B2B sector are likely to continue in the second half," and forecasted, "Expectations for the second half should be lowered."

However, gradual improvement is expected due to the base effect and other factors. Researcher Son said, "Although there is no short-term performance momentum, considering that one-time losses from the second half of last year were reflected, gradual improvement in performance is expected in the second half."