Sales of 1.4677 trillion KRW, Operating Profit of 246.8 billion KRW
"Strengthening Product Competitiveness Amid Global Economic Downturn"
Orion achieved its highest-ever performance in the first half of this year by actively operating in China and Vietnam despite the global economic downturn.
On the 14th, Orion announced that its consolidated operating profit for the first half reached 246.8 billion KRW, a 16.8% increase compared to the same period last year. Sales rose by 6.5% to 1.4677 trillion KRW. Orion explained, "Despite the challenging business environment due to the global economic recession and sluggish consumption, we grew by focusing on strengthening product competitiveness and differentiated sales activities by channel." In particular, the performance of its China and Vietnam subsidiaries was significant. Operating profits of the China and Vietnam subsidiaries increased by 23.1% and 16.2%, respectively, compared to the previous year.
Riga Chem Bio Science, an affiliate acquired in March this year, recognized 51.6 billion KRW of the approximately 130 billion KRW upfront payment received from Janssen in January for technology transfer as revenue in the first half, recording a pre-tax profit of 2.4 billion KRW. Having secured financial stability through capital increase and upfront payments from technology transfer, the company plans to accelerate new drug research and development and clinical progress.
An Orion official stated, “Despite the global economic downturn, we will continue our growth based on differentiated product power, price competitiveness, and locally specialized sales capabilities, while focusing on securing future growth engines such as expanding the food business based on solid cash flow generated through overseas operations.”
Growth in Exports by Korean Subsidiary Led by Kkobuk Chip... Profitability Improvement in China and Vietnam
By region, the Korean subsidiary recorded sales of 549.4 billion KRW, up 5.4%, and operating profit of 90.8 billion KRW, up 11.0%. The 50th anniversary of Choco Pie contributed to sales growth, and the new product Choco Pie House gained popularity. Additionally, Kkobuk Chip created a sensation in the U.S., significantly increasing overseas export sales and driving growth. Continuous cost management efforts from raw material procurement to product production also led to simultaneous growth in operating profit.
The China subsidiary achieved sales of 602.2 billion KRW, up 7.2%, and operating profit of 110.1 billion KRW, up 23.1%. It focused on sales in local growth channels such as snack shops. Particularly, the transition of the indirect sales system, including replacing discount stores with small retailers to improve profitability, is nearing completion, and by reducing market expenses, operating profit has also greatly increased.
The Vietnam subsidiary recorded sales of 216.6 billion KRW, up 7.7%, by increasing shelf share of high-growth products such as rice snacks and mass-produced bread, including the increased volume of Choco Pie. Operating profit reached 34.8 billion KRW, up 16.2%, through cost efficiency measures such as reducing logistics and advertising expenses.
The Russia subsidiary saw increased production volume due to the full operation of the expanded Choco Pie line at the end of last year, and the market distribution of new products Fresh Pie and Jelly Boy expanded, resulting in sales and operating profit growth of 13.0% and 3.1% respectively in ruble terms. However, due to an 11.6% depreciation of the ruble, sales in KRW terms decreased by 0.2% to 99.6 billion KRW, and operating profit decreased by 8.9% to 14.5 billion KRW.
"Focusing on Strengthening Market Dominance Based on Product Competitiveness Amid Global Recession"
Orion plans to strengthen market dominance in the second half of the year through differentiated sales activities by subsidiary based on product competitiveness.
The Korean subsidiary will expand sales based on the price competitiveness of its main brands. It plans to introduce the ‘1,000-won snack’ to ease consumer burden during the recession and gradually expand the product lineup. Alongside this, products with a ‘health’ concept will be launched in line with consumer trends.
The China subsidiary will increase exclusive products for growth channels such as snack shops and bulk markets, strengthen sales capabilities by developing specialized small retailers and expanding clients, and focus on external growth. In the first half, it reinforced its sales force by recruiting excellent talent from global food companies and reorganizing the sales organization, laying the foundation for growth. With the completion of the indirect sales system transition and the upcoming peak seasons of National Day and Lunar New Year, sales and operating profit growth are expected to gain further momentum in the second half.
In July this year, a new production line for potato flakes, the raw material for Oh! Gamja, Yegam, and Goraebab?which account for about 40% of total sales?was installed at the Shenyang plant near the directly managed potato farm in Inner Mongolia. By producing potato snack raw materials in-house, stable supply is ensured along with cost efficiency through reductions in raw material and logistics expenses.
The Vietnam subsidiary will focus on sales of main brands by reorganizing the number of snack and pie products and expand its consumer base by launching new children-targeted products such as jelly and rice snacks. It will also actively target convenience stores and e-commerce channels popular among young consumers and increase market share by launching channel-exclusive products.
The Russia subsidiary will increase market share based on the significantly expanded Choco Pie production capacity while focusing on expanding the market distribution of new products such as Fresh Pie and Jelly Boy. With the resumption of transactions with large chain store X5 and liquor and food specialty channel K&B, which had temporarily halted supply, the company plans to continue its growth through an aggressive sales strategy by continuously expanding dealers and clients.
Expansion into new markets such as India and the U.S. will also continue. In India, sales efforts will focus on the northeastern region, and based on the pie production line additionally established last year, the company plans to diversify products and target the market with custard and white Choco Pie as the main products. In the U.S., exports of Kkobuk Chip alone are expected to reach 20 billion KRW this year, and the company will accelerate market expansion by increasing competitive export items such as jelly and Chambbungeo-bbang. Alongside this, export volumes to Japan, Australia, and Canada will be expanded to achieve the Korean subsidiary’s annual overseas export target of 100 billion KRW.
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