"Advertiser Budget Cuts" Cheil Worldwide Q1 Operating Profit 53.4 Billion Won (Comprehensive)

Gross Profit Increased by 9% to 364.1 Billion KRW
Growth in Non-Affiliated Overseas Subsidiary Business

Cheil Worldwide received a slightly below-market consensus (estimate) performance report for the first quarter of this year due to advertisers' budget cuts amid concerns over economic slowdown.

Cheil Worldwide announced on the 28th that its consolidated operating profit for the first quarter of this year was 53.4 billion KRW, down 8.67% compared to the same period last year. Sales during the same period decreased by 0.52% to 941.6 billion KRW. Net profit was 41.4 billion KRW, down 8.47%. According to FnGuide, the market estimate for Cheil Worldwide's first-quarter operating profit was 53.7 billion KRW, and the sales estimate was 95.86 billion KRW.

Gross profit increased by 29.2 billion KRW to 364.1 billion KRW compared to the same period last year. The consolidated subsidiaries' gross profit rose significantly to 292.8 billion KRW from 258.9 billion KRW in the same period last year. This is analyzed to be due to the expansion of digital business and the development of non-affiliated businesses centered on overseas subsidiaries.

On the other hand, the headquarters recorded a gross profit of 71.3 billion KRW, down 4.7 billion KRW compared to the same period last year, due to reduced marketing budgets related to major advertisers' media. Selling and administrative expenses, including labor costs, also increased by about 12% to 310.7 billion KRW, resulting in a decline in operating profit.

A Cheil Worldwide official said, "Despite the expansion of domestic and international economic uncertainties and the reduction of advertisers' media-related marketing budgets, gross profit increased by 9% in the first quarter of this year due to the expansion of the digital business area and the growth of non-affiliated businesses of overseas subsidiaries."

Cheil Worldwide plans to minimize the impact of external uncertainties this year by expanding agency items such as digital service areas and developing new advertisers.