Operating Profit 375.9 Billion KRW... 48.7% Increase YoY
Continued Profitability for Two Consecutive Quarters
Food Business Maintains Growth in Overseas Markets
Bio Sector Improves Profitability Through High-Value Product Restructuring
CJ CheilJedang, the food industry leader, continued its profit trend for two consecutive quarters. Its food business, including Bibigo dumplings and frozen chicken, stood out overseas, and the profitability of its bio business, considered a high value-added industry, improved, resulting in a surprise performance with operating profit nearly doubling compared to a year ago.
A foreign family is eating Bibigo dumpling lunch boxes at the Bibigo concession set up at The CJ Cup. [Photo by CJ CheilJedang]
CJ CheilJedang announced on the 14th that its consolidated operating profit, including its subsidiary CJ Logistics, for the first quarter of this year was tentatively estimated at 375.9 billion KRW, a 48.7% increase compared to the same period last year. During the same period, sales rose 2% to 7.216 trillion KRW, and net profit increased by 213.5% to 154.6 billion KRW. Operating profit showed a clear recovery following the turnaround in the fourth quarter of last year (298.3 billion KRW, a 24% increase year-on-year).
Excluding CJ Logistics, CJ CheilJedang's first-quarter sales increased by 0.8% to 4.4442 trillion KRW, and operating profit rose 77.5% to 267 billion KRW. CJ CheilJedang explained, "The global business with a high operating profit margin performed well, and the domestic business focused on maximizing profitability through intensive cost-cutting efforts, leading to an increase in operating profit. The Lunar New Year gift sets also contributed to profitability improvement as sales occurred in the first quarter this year."
Specifically, the food business segment recorded first-quarter sales of 2.8315 trillion KRW, up 2.6% year-on-year, and operating profit increased by 37.7% to 184.5 billion KRW. The domestic food business saw a spread of the home meal trend due to rising dining-out prices, and through strategic collaboration with online platforms and expansion of new sales channels, sales volumes of key products such as Bibigo dumplings, Hetbahn, and Gourmet Sobaba chicken increased by more than 10%.
The overseas food business achieved sales of 1.3752 trillion KRW by continuing growth in core regions such as North America and new markets like Europe and Australia, led by Global Strategic Products (GSP). Bibigo dumplings, the No. 1 brand in the North American market, maintained a lead more than three times that of the second-ranked brand. Additionally, frozen rice sales increased by 23% due to rising demand for rice-processed products. Sales in Europe and Australia, where the company focused on entering major distribution channels based on a new territory expansion strategy, rose by 45% and 70%, respectively. Furthermore, frozen chicken and frozen/room-temperature processed rice, selected as the 'Next Dumpling,' increased sales by 25% and 23%, respectively, establishing themselves as new growth drivers for the overseas food business.
The bio business segment, which CJ CheilJedang is strengthening as a future growth engine, recorded sales of 1.0216 trillion KRW, a 3% increase year-on-year, and operating profit of 97.8 billion KRW, up 55%. The company explained that restructuring the business toward high value-added products led to improved profitability. Sales of tryptophan, the global No. 1 product, increased by 44%, and specialty amino acid sales rose by 32%. Specialty products such as arginine, histidine, and valine accounted for 22% of bio sales, marking an all-time high. Premium seasoning material 'TasteEnrich' expanded new demand, growing sales by 62%.
CJ Feed & Care, the feed and livestock independent corporation whose sale is being re-pursued, saw sales decrease by 10% to 591.1 billion KRW and recorded an operating loss of 15.2 billion KRW. The deficit narrowed by 31.5 billion KRW as the livestock businesses in key countries, Indonesia and Vietnam, entered a stabilization phase.
CJ CheilJedang plans to establish a local corporation in France, where the Summer Olympics will be held this year, to expand its K-food dominance in Europe. Domestically, it intends to develop differentiated products such as Gourmet Sobaba chicken to expand processed food demand and continue qualitative growth through management efficiency improvements. The bio business segment plans to strengthen profitability by expanding sales of high value-added specialty products and will actively enter the bio foundry field to secure new production bases.
A CJ CheilJedang official said, "To leap forward as a 'global market leading player,' we will accelerate the expansion into new overseas territories and continue efforts to 'maximize profitability.'"
Meanwhile, Daesang, which also operates food and bio businesses like CJ CheilJedang, is expected to see a significant performance rebound in the first quarter of this year. This is due to expanded exports of its flagship 'Jongga' kimchi and improved bio industry conditions compared to before. According to Daesang's first-quarter earnings consensus (market average forecast), operating profit is expected to rise 81.93% year-on-year to 45.3 billion KRW. Sales during the same period are forecasted to increase by 3.02% to 1.0195 trillion KRW.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
