Impact of Rising Cocoa and Sugar Prices... Orion's Q3 Operating Profit Down 2.6%

Consolidated Revenue of 137.1 Billion KRW... Sales Increase by 1.1%

Orion's profits declined in the third quarter of this year due to the impact of rising prices of raw materials such as cocoa and sugar, which are ingredients for confectionery.

Orion announced that its consolidated operating profit for the third quarter of this year was 137.1 billion KRW, down 2.6% from the same period last year. Sales during the same period increased by 1.1% to 774.9 billion KRW. The company explained that despite company-wide cost management efforts, operating profit slightly decreased due to rising prices of raw materials such as cocoa and sugar, as well as increases in labor costs and market expenses. Cumulative sales up to September this year recorded 2.2425 trillion KRW, up 4.6% from the same period last year, and operating profit rose 9.1% to 383.9 billion KRW.

Looking at the third quarter performance by region, the Korean subsidiary recorded sales of 271.1 billion KRW, down 0.4% year-on-year, due to sluggish domestic consumption and the closure of retail outlets such as supermarkets, while operating profit grew 2.0% to 43.8 billion KRW. The company explained that in the fourth quarter, the burden from the continued rise in prices of key raw materials such as cocoa is expected to intensify, and it plans to focus on defending profitability.

The Chinese subsidiary recorded sales of 322.3 billion KRW, down 2.2%, and operating profit of 63.5 billion KRW, down 12.7%. There was a temporary decrease in sales and increase in costs due to the transition to an indirect sales system through discount stores to improve profitability. In the fourth quarter, the company plans to strengthen sales capabilities in growth channels by expanding products dedicated to snack shops and bulk markets and developing specialized small retailers, while increasing supply in preparation for the peak demand during the Lunar New Year.

The Vietnamese subsidiary recorded sales growth of 3.5% to 121.7 billion KRW, supported by growth in rice snacks, mass-produced bread, and the launch of new products such as Chambbung-eo-bbang. Operating profit grew 8.5% to 23.8 billion KRW. In the fourth quarter, the company plans to implement strategies to secure market leadership ahead of Tet, the largest local holiday, and expand new products such as jelly and rice snacks targeting children consumers.

Additionally, the Russian subsidiary achieved sales growth of 27.6% to 61.9 billion KRW and operating profit growth of 37.5% to 9.2 billion KRW. Strong local demand, normalization of transactions with major chain stores such as X5 and liquor and food specialty channels like K&B, and expansion of dealers and clients contributed to the strong performance. In the fourth quarter, the company plans to strengthen sales capabilities in high-growth channels such as hard discount stores, liquor specialty stores, and e-commerce. With the existing factory operating rate exceeding 130%, the company is also considering new construction and expansion of production facilities.

An Orion official stated, "Despite the global economic downturn, we will actively respond to the rapidly changing domestic and overseas markets based on product competitiveness and thoroughly manage manufacturing costs to continue healthy growth in both scale and profitability."