Kakao's Cost Burden... Lotte Wellfood's Q3 Operating Profit Down 5.7% YoY

Consolidated Revenue of 76 Billion KRW
Sales of 1.0785 Trillion KRW...0.7% Decrease
Market Stabilization and Profitability Improvement Expected

Lotte Wellfood's profitability declined in the third quarter of this year due to cost burdens such as rising cocoa prices.

Lotte Wellfood announced on the 1st that its consolidated operating profit for the third quarter was tentatively estimated at 76 billion KRW, down 5.7% compared to the same period last year. During the same period, sales decreased by 0.7% to 1.0785 trillion KRW, and net profit fell by 35.3% to 46.2 billion KRW.

Specifically, the domestic business segment recorded sales of 879.8 billion KRW, while the overseas business segment posted 208 billion KRW. In the domestic business, sales slightly decreased by 1.7% year-on-year due to sales structure improvement activities such as rationalizing the food ingredient channel, and operating profit declined by 1.4% due to the cost burden of cocoa despite profitability improvements.

In the global business, although sales of ice cream in Kazakhstan and India were sluggish, overall sales grew by 4.4% compared to the same period last year due to growth in Indian dry goods and other subsidiaries. However, operating profit in the global business also decreased by 22.9% due to the cocoa cost burden.

Lotte Wellfood plans to develop Pepero as a global brand and expand its Zero lineup to strengthen its No. 1 position in the domestic confectionery market in Health & Wellness (H&W). Additionally, through marketing activities for the meal theory brand launched as a Home Meal Replacement (HMR) brand, it aims to increase brand awareness and plans to actively expand overseas starting next year.

Overseas, the company plans to strengthen investments to expand sales of Choco Pie in India and pursue sales normalization in Kazakhstan by considering Zero jelly production and additional brand introductions next year.

A Lotte Wellfood official stated, "The cost burden increased due to the sharp rise in cocoa prices in the first half of this year," adding, "We expect prices to stabilize with improved harvest yields in the future, and profitability to recover through price normalization."