Despite K-Mandu's Success, Domestic Demand Slump Hurt... CJ CheilJedang Food Operating Profit Down 31%

Sales excluding CJ Logistics 4.6204 trillion KRW...1.1%↓
Expansion of K-Food in North America, Europe, Oceania
"Global content collaboration...to raise Bibigo awareness"

CJ CheilJedang faced a disappointing third-quarter performance as domestic sluggishness dealt a heavy blow despite the global expansion of the K-food territory.

CJ CheilJedang announced on the 12th that its third-quarter sales this year reached 4.6204 trillion KRW, a 1.1% decrease from 4.6734 trillion KRW a year earlier. Operating profit for the same period was 276.4 billion KRW, maintaining a similar level to the previous year's 275.3 billion KRW.

This excludes the performance of its subsidiary CJ Logistics. Including CJ Logistics, sales amounted to 7.4143 trillion KRW, and operating profit was 416.2 billion KRW.

Visitors ordering K-food at CJ CheilJedang's Paris 'Bibigo Market'. Photo by CJ CheilJedang

By segment, the food business in the third quarter struggled significantly due to weak domestic demand. Operating profit dropped sharply by 31.1% year-on-year to 161.3 billion KRW. Sales decreased by 1.1% to 2.9721 trillion KRW.

CJ CheilJedang rapidly expanded the K-food territory in overseas markets in the third quarter. Overseas food business sales grew 5% year-on-year to 1.4031 trillion KRW. Sales in Europe, where the company is focusing its expansion efforts this year?including Germany, France, the UK, and the Netherlands?increased by 40%. Sales in the Oceania region also rose by 24%, driven by expanded sales of Bibigo dumplings in large supermarket chains in Australia and New Zealand.

In North America, sales of key products such as dumplings (+14%) and pizza (+11%) grew significantly more than competitors, solidifying the number one position. Notably, from January to September this year, the sales growth rate of ‘Bibigo Dumplings’ was 33%, more than double the growth rate of the entire U.S. dumpling market (based on B2C sales in large supermarkets) at 15% during the same period.

However, the effect of K-food territory expansion was dimmed by weak domestic consumption. Domestic food business sales fell 6% year-on-year to 1.569 trillion KRW. A CJ CheilJedang official explained, "Despite growth in overseas markets, domestic food business faced setbacks due to sluggish domestic consumption and cost burdens."

Sales in the bio business increased by 1.1% year-on-year to 1.0694 trillion KRW, and operating profit grew 74.9% to 82.4 billion KRW during the same period. Increased sales of high-margin products such as tryptophan (+21%), feed-grade arginine (+35%), and Taste&Rich (+35%) contributed to improved profitability. The sales proportion of high value-added specialty amino acids such as valine, isoleucine, and histidine also reached 22%.

The feed and livestock independent corporation CJ Feed&Care recorded sales of 578.9 billion KRW and operating profit of 32.7 billion KRW. Although sales slightly declined due to lower feed prices and sales volume in major business countries, operating profit remained positive for the second consecutive quarter through business structure and productivity improvements.

CJ CheilJedang plans to further enhance the recognition of the Bibigo brand through collaborations with various global content in the fourth quarter while focusing on expanding the K-food territory. The bio business division intends to continue discovering new demand for ‘Taste&Rich,’ which leads the premium seasoning market, and further sophisticate its business portfolio.