K-Food 'Leading' and Bio 'Driving'... CJ CheilJedang's Third Consecutive Quarter of Growth

CJ CheilJedang Q2 Earnings Announcement
Operating Profit Up 11.3% YoY... Exceeds Consensus
Overseas Success in North America, High Growth in Europe & Oceania
Bio Maximizes Profitability... F&C Turns Profitable

CJ CheilJedang continued its growth momentum in the second quarter of this year, driven by increased overseas sales of K-food products such as dumplings and gimbap, as well as the advancement of its bio business, a future growth engine.

CJ CheilJedang announced on the 13th that its consolidated operating profit for the second quarter of this year, including its subsidiary CJ Logistics, was preliminarily estimated at 383.6 billion KRW, up 11.3% from the same period last year. During the same period, sales rose 0.3% to 7.2387 trillion KRW, and net profit increased 16% to 147.8 billion KRW.

Previously, the securities industry consensus for CJ CheilJedang’s second-quarter operating profit was 376.6 billion KRW, a 9.29% increase from the same period last year. The actual results slightly exceeded this, continuing the upward trend in operating profit for three consecutive quarters since the fourth quarter of last year. Excluding CJ Logistics, the second-quarter operating profit rose 14.1% year-on-year to 269 billion KRW, while sales decreased 2.1% to 4.3314 trillion KRW.

The food business division posted an operating profit of 135.9 billion KRW, down 4.8% from the same period last year, and sales of 2.7051 trillion KRW, a 1% decrease. Excluding the Chinese food subsidiary Zhishangju, which was sold in July last year, sales and operating profit grew by 1% and 2%, respectively. Domestic food business sales (1.3807 trillion KRW) increased 3% overall despite weakened consumer sentiment, driven by increased sales of key processed food products such as Hetbahn (+18%) and dumplings (+12%).

In particular, the overseas food business continued its growth trend with sales of 1.3244 trillion KRW. In Europe, sales increased 57% as the company accelerated entry into major distribution channels centered on Western Europe, including the UK, Germany, and the Netherlands. In North America, stable growth was led by global strategic products (GSP) such as dumplings (+28%) and ambient processed rice (+24%), as well as pizza (+12%). 'Bibigo Dumplings' and Schwan’s flagship pizza brand 'Red Baron' maintained their number one positions by widening the gap with the second-ranked brand compared to the previous quarter. In Oceania, centered on Australia, new demand was created by launching new Bibigo frozen gimbap and dumpling products at major retailer Woolworths, resulting in a 51% increase in sales.

Foreign tourists are browsing products at CJ CheilJedang's Bibigo exclusive store, which opened at Shinsegae Duty Free in Incheon Airport Terminal 1.
[Photo by CJ CheilJedang]

The bio business division recorded an operating profit of 99 billion KRW, up 17.4% year-on-year, by expanding sales of high value-added products based on a profitability maximization strategy. Sales during the same period increased 1% to 1.0564 trillion KRW. Sales of high-margin products such as tryptophan (+38%), Taste & Nutrition (+37%), and specialty amino acids (+15%) grew significantly. In particular, 'Taste Enrich,' which leads the premium seasoning market within the Taste & Nutrition business, saw sales volume increase by more than 20% as demand recovered in the global market.

The feed and livestock independent corporation (CJ Feed&Care) turned profitable with an operating profit of 34.1 billion KRW, a 288% increase. Although sales declined 12% to 569.9 billion KRW due to reduced feed and livestock sales in major business countries, the company explained that profitability greatly improved thanks to stabilization of pork and livestock prices and cost reduction efforts.

CJ CheilJedang has set a policy to expand its K-food dominance across Europe, centered on France where it established a corporation last May, while focusing on performance improvement in China and Japan through a selection and concentration strategy. The bio business division plans to enhance profitability mainly in the US and Europe and create new demand in the global seasoning materials market by leveraging Taste Enrich.

A CJ CheilJedang official said, "We will focus on 'expanding new territories for K-food' led by global strategic products, while accelerating 'qualitative growth' through management efficiency."