Shinsegae Food Continues Q3 Performance Improvement... New Business Progressing Smoothly

[Asia Economy Reporter Song Hwajeong] Shinsegae Food is expected to continue its performance improvement in the third quarter of this year, driven by the smooth progress of new businesses.

According to Hana Financial Investment on the 20th, Shinsegae Food's consolidated sales and operating profit for the third quarter are estimated at 342.9 billion KRW and 7 billion KRW, respectively. This represents an increase of 6.8% and 55.9% compared to the same period last year. Eunju Shim, a researcher at Hana Financial Investment, said, "Although operating profit is expected to slightly decrease compared to the second quarter due to fewer business days in the third quarter, the performance improvement trend will continue, resulting in a significant improvement compared to the same period last year."

Sales growth is driven by the manufacturing and bakery sectors, while profitability improvement is underway in the catering and dining sectors. Catering sales are rapidly improving profitability by restructuring low-profit clients while securing large customers. The dining sector's deficit is also expected to improve significantly compared to the same period last year. Researcher Shim analyzed, "The number of No Brand Burger franchise stores is approaching 100 as of August, and manufacturing sales are growing alongside the No Brand Burger franchise. Starbucks-related sales remain solid, and double-digit sales growth compared to the same period last year is expected in the third quarter."

New businesses are also progressing smoothly. The number of No Brand Burger franchise stores is expected to surpass 100 by the end of the year. Researcher Shim explained, "Next year, profit leverage will be fully realized through royalty income and increased manufacturing plant utilization (supplying patties, hamburger buns, lettuce, etc.). The profit contribution of the No Brand Burger franchise business is estimated to rise from 10% this year to 26% next year." The alternative meat business is also progressing well. In July, alternative meat sandwiches were launched at Starbucks. It is expected to expand sales channels to B2C (business-to-consumer) by broadening the portfolio to include ham and sausages in the future.

Researcher Shim said, "Existing business units (catering and dining), which had been sluggish due to minimum wage increases and COVID-19, are showing meaningful profitability recovery through internal restructuring. With the expansion of No Brand Burger franchises, profit resilience is expected to strengthen further next year, and new businesses are progressing smoothly, positively evaluating the structural strengthening of the company's capabilities."