Growth in High-Profit Bio Products and Accelerated Food Structure Innovation Drive Significant Profitability Improvement
Global Sales Surpass 60% for the First Time with Enhanced Competitiveness in Overseas Food and Bio Businesses Including US Schwans
[Asia Economy Reporter Lee Seon-ae] CJ CheilJedang has attracted attention by achieving record-breaking performance despite the economic downturn caused by the novel coronavirus disease (COVID-19) pandemic.
On the 11th, CJ CheilJedang announced through its earnings report that its sales in the second quarter of this year grew 7.4% year-on-year to KRW 5.9209 trillion, and operating profit increased by 119.5% to KRW 384.9 billion (consolidated basis).
Excluding CJ Logistics' performance, sales rose 8.6% to KRW 3.4608 trillion, and operating profit surged 186.1% to KRW 301.6 billion. With continuous growth in overseas businesses such as food and bio sectors, the global sales ratio exceeded 60% for the first time. The proportion of high-profit bio products increased, and the results of food business structure innovation accelerated, leading to a significant rise in operating profit.
The food business division recorded sales of KRW 2.191 trillion, up 12.1% compared to the same period last year. Global food sales (including KRW 722.8 billion from U.S. Schwans sales) increased by 26% year-on-year to KRW 1.0485 trillion, surpassing KRW 1 trillion for the second consecutive quarter. Domestically, the expansion of the ‘home meal’ trend boosted sales of home meal replacements (HMR), offsetting the decline in B2B sales due to reduced dining out. The proactive profit structure improvement strategy, which has been accelerated since last year, translated into results, with operating profit rising 134% to KRW 126.4 billion.
The bio business division, focusing on amino acids and seasoning materials, posted sales of KRW 742.9 billion, similar to last year, but profitability greatly improved, recording a record-high operating profit of KRW 110.9 billion, an 87% increase year-on-year. Although demand was subdued due to the global pandemic, the increased sales proportion of high-profit product groups such as tryptophan, valine, arginine, and nucleic acids drove the operating profit growth. It is evaluated that focusing on portfolio diversification and cost competitiveness enhancement based on world-class global R&D capabilities was effective.
CJ Feed&Care (feed + livestock) recorded sales of KRW 526.9 billion, an 8% increase from the previous year, and operating profit turned positive at KRW 64.3 billion.
Since the second half of last year, CJ CheilJedang has taken proactive crisis response measures through high-intensity structural improvements such as profitability enhancement and financial structure improvement. Even in the second quarter, amid ongoing global uncertainties caused by COVID-19, it recorded the highest-ever operating profit, turning crisis into opportunity. With the continued increase in home meal demand domestically and internationally and the further spread of consumption trends centered on convenience foods, growth is expected to continue into the third quarter.
CJ CheilJedang stated, “As a result of focusing on ‘innovative growth’ emphasizing profitability enhancement since last year, we achieved results beyond expectations despite the global crisis situation,” adding, “We will continue future growth by concentrating capabilities on core products and businesses and securing competitiveness through strategic R&D investment.”
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