'K-Ramen Craze' Q2 Big 3 Sales 'Hoho'... Nongshim Alone 'Bitter Smile'

Ramen Exports Surpass $100 Million Monthly in April, May, and June
Samyang Foods' Q2 Operating Profit Soars 80%
Nongshim Alone Expected to See Operating Profit Decline... "Base Effect"

As the global K-Ramen craze continues, exports in the first half of the year surpassed $500 million, and Nongshim, Ottogi, and Samyang Foods appear to have maintained strong sales momentum in the second quarter of this year. In particular, Samyang Foods achieved explosive growth by boosting its operating profit by more than 80% year-on-year, thanks to the export of Buldak Bokkeummyeon. On the other hand, Nongshim faced a decline in operating profit compared to the previous year due to sluggish performance in its key North American market and continued high cost burdens, resulting in a bittersweet outcome.

According to export-import trade statistics from the Korea Customs Service on the 3rd, ramen exports exceeded $100 million for three consecutive months in the second quarter of this year. After surpassing $100 million for the first time in April with $108.53 million, exports reached $100.36 million in May and $100.05 million (provisional) in June, totaling $319.94 million worth of ramen crossing borders over three months. This represents a 34.3% increase compared to $238.19 million during the same period last year.

Thus, ramen exports in the first half of the year exceeded $500 million for the first time, setting a record high. If this trend continues, ramen exports are expected to break the record for the tenth consecutive year this year.

With the surge in K-Ramen popularity leading to record-high exports, the sales of the three major domestic ramen companies?Nongshim, Ottogi, and Samyang Foods?are also estimated to have continued growing in the second quarter. In particular, Samyang Foods maintained explosive growth driven by Buldak Bokkeummyeon exports. According to Kiwoom Securities, Samyang Foods’ sales are estimated at 395.7 billion KRW, a 38.7% increase compared to the previous year. Nongshim and Ottogi are estimated to have experienced moderate growth. According to Hi Investment & Securities, Nongshim’s second-quarter sales are estimated at 877.6 billion KRW, up 4.8% from a year earlier. Ottogi’s sales are also estimated to have grown 3.9% year-on-year to 887.8 billion KRW.

However, operating profit outlooks differ among the companies. Samyang Foods’ operating profit is estimated at 81.2 billion KRW, an 84% increase from a year ago. This continues the remarkable 80% growth rate recorded in the first quarter, allowing the company to break into a broad smile. The distribution channels, which were previously limited to overseas Korean supermarkets, have rapidly expanded to main channels in the U.S. and Europe, steadily raising operating profit estimates.

Despite adverse conditions such as rising costs, Ottogi is estimated to have recorded an operating profit of 67.4 billion KRW, a 4.4% increase year-on-year. This improvement is attributed to better overseas business performance in markets like the U.S. and Vietnam, as well as expanded volumes of seasoning, sauce, and frozen food products beyond ramen.

Conversely, Nongshim is expected to see a decline in operating profit for the second quarter compared to the previous year, following decreases in the fourth quarter of last year and the first quarter of this year. Nongshim’s operating profit is estimated at 51.2 billion KRW, down 4.7% year-on-year. The slump is largely due to sluggish performance in the North American market. After starting operations at its U.S. Plant 2 in the second quarter of 2022, operating profits grew sharply, so the current figures have worsened due to a 'base effect.' Nongshim is compensating for the North American market’s weakness with strong exports to Europe and Southeast Asia. Recently, it entered French retailers Leclerc and Carrefour. However, rising costs for wheat, starch, and other raw materials continue to increase, making it difficult to reverse the trend.

To turn the tide, Nongshim is targeting the European Union (EU) market with France as a base and is also considering building a dedicated factory domestically to meet export demand. Additionally, in October this year, it plans to add a high-speed production line dedicated to cup noodles at its U.S. Plant 2. Among ramen sold in the U.S., cup noodles accounted for 63% as of last year. A Nongshim official stated, "With this line expansion, we plan to diversify the shapes and flavors of cup noodles and expand localized products preferred by U.S. consumers to increase market share."