[Click eStock] "Pulmuone, Continued Overseas Success... Operating Profit Up 28% Next Year"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment stated on the 14th that it expects Pulmuone's operating profit next year to increase by 28% compared to this year, driven by continued performance in the overseas sector.

Researcher Sim Eunju of Hana Financial Investment said, "This year, Pulmuone's consolidated sales are expected to decrease by 0.6% year-on-year to 2.3667 trillion KRW, but operating profit is expected to increase by 56.4% to 47.8 billion KRW," adding, "Consolidated sales and operating profit for the fourth quarter are estimated to increase by 4.5% and 56.2%, respectively, compared to the previous year."

Researcher Sim cited the main factors for Pulmuone's profit improvement this year as the expansion of demand for home meal replacement (HMR) products in the food sector, profit leverage effects due to eased promotional competition, and significant reduction in losses of overseas subsidiaries. The loss of the U.S. subsidiary is expected to sharply decrease from 19.5 billion KRW last year to around 2 billion KRW this year. The Japanese subsidiary is also expected to reduce its loss from 10.7 billion KRW last year to around 8 billion KRW this year, while the Chinese subsidiary is anticipated to turn profitable, shifting from a 2.6 billion KRW loss last year to a profit of 6.9 billion KRW this year.

Next year, consolidated sales and operating profit are estimated to reach 2.5811 trillion KRW and 61.1 billion KRW, respectively, representing increases of 9.1% and 27.7% year-on-year. Researcher Sim expects that "domestic food sales will continue to grow due to steady in-home demand, and overseas subsidiaries will maintain sales growth and profit improvement trends driven by the expansion of new HMR product lineups." In particular, the U.S. subsidiary is expected to turn profitable on an annual basis next year.

The increased profit visibility of overseas subsidiaries is also a positive factor. Researcher Sim emphasized, "Next year, combined overseas sales (U.S. + Japan + China) are expected to increase by 17.4% compared to this year. Overseas subsidiaries, which had been a factor for past performance and valuation discounts, have significantly reduced their losses through restructuring and product portfolio improvements."