Resident Doctors' Strike Hits Group Meal Services... CJ Freshway's Q1 Operating Profit Plummets

Q1 Sales of 731.5 Billion KRW, Operating Profit of 10.5 Billion KRW Recorded
Increased Sales in Food Ingredients Distribution and Group Catering
"Operating Profit Recovery in Q2 Through Expansion of Differentiated Products"

Due to the prolonged strike of resident doctors, CJ Freshway's operating profit in the first quarter of this year decreased by nearly 17% compared to a year ago.

CJ Freshway announced on the 9th that its operating profit for the first quarter was 10.5 billion KRW, a 16.7% decrease from the previous year. However, sales increased by 4.9% year-on-year to 731.5 billion KRW.

CJ Freshway explained, "Sales increased mainly in core businesses such as food ingredient distribution and group catering, but operating profit temporarily declined due to a decrease in operating days caused by seasonal off-peak periods and the resident doctors' strike."

CJ Freshway plans to recover operating profit in the second quarter through expanding differentiated products and strengthening its business portfolio.

By segment, sales in the food ingredient distribution business reached 538.9 billion KRW despite the downturn in the dining-out market. The co-growth effect from the business expansion of major clients, which are dining franchise companies, was effective. Among the clients, there are some mega franchises with annual sales exceeding 100 billion KRW in the past year. The ‘Dining Solution,’ a consulting service tailored for the dining industry, has established a revenue model and is creating successful cases. High value-added businesses such as kids and senior meal food ingredients also showed stable growth. Leveraging these results, CJ Freshway plans to actively target new markets such as military catering and e-commerce and diversify its revenue streams.

Sales in the group catering business reached 178.5 billion KRW. Despite an unstable market environment due to the resident doctors' strike, CJ Freshway proved its competitiveness by consecutively opening new group catering sites. The ‘Snack Pick,’ a takeout corner for convenience meals, increased customer inflow by strengthening marketing activities such as collaborations with popular F&B brands and launching seasonal products. CJ Freshway will continue to accelerate future business preparations, including continuous new order acquisition and the introduction of food tech.

Sales in the manufacturing business amounted to 14.1 billion KRW. ‘Fresh Plus,’ a food manufacturing specialist company, supplies customized products such as sauces to various clients including dining establishments. In the second quarter, the new manufacturing infrastructure, the Eumseong factory, is expected to start full operation, giving momentum to the business.

Gwak Kyung-min, CFO of CJ Freshway, said, “Based on our differentiated products and logistics innovation, which are our super-gap capabilities, we will maximize customer value and focus on improving profitability through efficiency efforts across the entire value chain.”