"Reduced Deficit"... SAMG Entertainment Focuses on Profitability Improvement with Q2 Performance Enhancement

SAMG Entertainment (CEO Kim Suhoon, hereinafter SAMG Entertainment) has succeeded in reducing the scale of its operating loss.

SAMG Entertainment announced on the 14th that its cumulative sales for the first half of this year amounted to approximately 49.6 billion KRW, with an operating loss of about 9.6 billion KRW, recording about 5.9 billion KRW in the first quarter and about 3.7 billion KRW in the second quarter, respectively.

In particular, during the process of focusing on profitability improvement this year, SAMG Entertainment lowered its cost of sales ratio by 7.5% in the second quarter and reduced selling and administrative expenses by more than 500 million KRW, thereby reducing the operating deficit by approximately 2.2 billion KRW.

A SAMG Entertainment official stated, “The noteworthy point is that the second quarter performance improved compared to the first quarter,” adding, “By reorganizing low-growth business sectors such as fashion and gaming and concentrating capabilities on IP production and value-added creation related to IP, which are our main businesses, we were able to adjust the cost ratio and selling and administrative expense ratio.”

However, despite the improved performance, SAMG Entertainment’s cumulative net loss for the first half was about 16.3 billion KRW, confirming that losses are still ongoing. On the same day, SAMG Entertainment also submitted a disclosure regarding losses from derivative transactions, explaining that due to convertible bonds previously issued, derivative valuation losses of about 4.8 billion KRW were reflected as financial expenses in the financial statements, significantly increasing the net loss for the first half.

A SAMG Entertainment official explained, “The derivative valuation loss is a non-cash loss, so no actual cash outflow occurs,” and added, “It is merely an accounting recognition of derivative valuation loss caused by the difference between the conversion price of the convertible bonds issued by SAMG Entertainment and the stock price.”

SAMG Entertainment stated that it plans to focus on improving profitability in various ways to turn a profit within the year. The profits from the movie Love’s Hatchuping, which is creating a box office hit as a domestic 3D animation, are expected to be reflected in the financials in the second half, and additional revenue generation from its release in China is also being targeted.

Furthermore, high growth as a global IP holder is anticipated. The sales of its Guangzhou distribution corporation in China reached about 10 billion KRW in the first half of this year, already surpassing last year’s annual sales. Additionally, there is further growth expectation following the recent announcement of the broadcast of Tiny Ping Season 2 in Japan and simultaneous entry into offline store merchandising.

Along with this, new IPs scheduled to air in the second half include Metal Card Bot Season 2, Wish Cat, and Catch! Tiny Ping Season 5, which are set to launch sequentially. Moreover, SAMG Entertainment has signed new IP licensing and distribution contracts with well-known domestic companies such as GS Retail, Mega Coffee, Mom’s Touch, and Samchully Bicycle, forecasting high sales growth in the second half.

Kim Suhoon, CEO of SAMG Entertainment, said, “SAMG Entertainment possesses the capabilities and skills to produce IPs that can succeed in the global market and has completed a revenue model capable of generating various high value-added profits based on major IPs,” adding, “With movie hits, new IP launches, and global sales expansion all underway, we will clearly be able to show performance improvements resulting from profitability enhancement in the near future.”