Surpassing 1 Trillion Won in Sales for 2 Consecutive Quarters with 1.065 Trillion Won in Q2
Rising Raw Material Costs and Intensified Competition Amid Domestic Demand Slowdown
"Focusing on Healthy Pleasure, No Sugar, and Factory Efficiency"
Lotte Chilsung Beverage succeeded in surpassing 1 trillion KRW in sales for the second consecutive quarter, but faced a disappointing performance in the third quarter as profitability declined in both the beverage and liquor businesses amid domestic demand slowdown and rising raw material costs. In particular, the core beverage segment saw sales plummet despite implementing price increases.
Lotte Chilsung Beverage announced on the 5th that its consolidated operating profit for the third quarter was 78.7 billion KRW, down 6.6% compared to the same period last year. During the same period, sales increased by 28.3% to 1.065 trillion KRW, while net profit fell 34.4% to 44.5 billion KRW.
The core beverage segment experienced negative growth in both sales and operating profit in the third quarter. Sales amounted to 539.1 billion KRW, down 5.1% (28.9 billion KRW) year-on-year, and operating profit was 52.8 billion KRW, down 15.1% (9.4 billion KRW) compared to the previous year.
The beverage segment’s sluggish performance is attributed to the difficulty in sales rebound due to domestic demand stagnation and worsening profitability caused by increased raw material costs such as sugar. A Lotte Chilsung Beverage official explained, "Most categories showed a decline amid a deteriorating business environment caused by domestic consumption slowdown, prolonged rainy season, rising raw material costs including sugar, orange, and coffee, adverse external conditions due to high exchange rates, and ongoing business expense burdens."
However, energy drinks saw a 2% increase in sales year-on-year due to rising demand. Sports drink sales also grew 8% compared to the previous year, supported by increased outdoor activities and the popularity of 'Gatorade Zero,' launched in the second quarter of this year. Beverage export performance also rose 3.1% from a year earlier. Lotte Chilsung Beverage currently sells various beverage brands such as 'Milkis' and 'Aloe Juice' in over 50 countries including the United States, Japan, and Southeast Asia.
As a result, cumulative sales in the beverage segment from the first to third quarter totaled 1.5082 trillion KRW, down 1.3% (20.6 billion KRW) year-on-year, and operating profit was 112.2 billion KRW, down 24.7% (36.8 billion KRW) compared to the previous year.
In the third quarter, the liquor segment recorded sales of 204.2 billion KRW, up 1.5% (3.1 billion KRW) year-on-year, but operating profit declined 30.7% (4.3 billion KRW) to 9.7 billion KRW during the same period.
A Lotte Chilsung Beverage official explained, "The decline in profitability in the liquor segment is largely due to intensified competition within the market." However, growth was driven by a 4.6% (3.8 billion KRW) increase in soju sales, a 16.0% (3.2 billion KRW) rise in beer sales, and a 6.1% (0.3 billion KRW) increase in RTD products such as Soonhari Lemon Jin.
Thus, cumulative sales in the liquor segment from the first to third quarter reached 621.2 billion KRW, up 2.3% (14.2 billion KRW) year-on-year, while operating profit fell 24.5% (8.3 billion KRW) to 25.6 billion KRW.
Meanwhile, the global segment posted sales of 351 billion KRW, a 359.5% (274.6 billion KRW) increase from a year earlier, and operating profit rose 72.5% (6.0 billion KRW) to 14.3 billion KRW. Among overseas subsidiaries, the Philippine corporation (PCPPI) showed strong sales and profitability due to improved business conditions. As a result, sales increased 5.1% (11.9 billion KRW) year-on-year to 242.3 billion KRW, and operating profit improved by 98.6% (7.5 billion KRW) to a loss of 100 million KRW.
Earlier, Lotte Chilsung Beverage announced plans to enhance corporate value and increase shareholder value by achieving sales of 5.5 trillion KRW, a return on equity (ROE) of 10-15%, a debt ratio below 100%, and a shareholder return rate of over 30% by 2028.
A Lotte Chilsung Beverage official stated, "In beverages, we will expand the no-sugar business and healthy pleasure portfolio, and in liquor, we will strengthen competitiveness in soju and beer while responding to new trends with distilled spirits and RTD products." They added, "We will also streamline costs by consolidating factory production lines and introducing automation centers at logistics hubs."
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