'Nongshim's Shin Ramyun Export Boom, Domestic Market Holds Back... Q3 Operating Profit Down 32%'

Consolidated Sales of 850.4 Billion KRW, Operating Profit of 37.6 Billion KRW
Overseas Business Boosted Sales
Profit Declined Due to Increased Promotion Costs from Domestic Demand Slump

Nongshim recorded an operating profit more than 30% lower than a year ago, struggling with severe domestic demand slump despite strong exports of Shin Ramyun in the third quarter of this year.

On the 14th, Nongshim announced that its consolidated operating profit for the third quarter was 37.6 billion KRW, a 32.5% decrease compared to the same period last year. Sales amounted to 850.4 billion KRW, down 0.6% during the same period. The operating profit margin stood at 4.4%.

On the 3rd, 'Neoguri's Ramen Shop,' where you can choose from Nongshim ramen, began operating at Skypark Myeongdong Branch 3 in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Despite the success of overseas business driven by the popularity of K-culture, the prolonged domestic demand slump caused significant damage.

Overseas business contributed significantly to third-quarter sales. There was steady growth centered on domestic exports (+33.5%), with the United States (+1.4%), Japan (+20.3%), Australia (+15.4%), and Vietnam (+20.4%) all showing balanced growth. Nongshim explained, "This is analyzed as the effect of expanding the new brand lineup considering the food culture of each country, and conducting more aggressive marketing by increasing the proportion of direct transactions through client restructuring."

However, difficulties were experienced in the domestic and Chinese markets. The domestic market shrank due to economic slowdown, with particularly large sales declines in the snack (-6.6%) and beverage (-13.8%) categories. The Chinese business also saw sales decrease (-21%) due to continued local consumption stagnation, especially poor sales in online channels.

Operating profit sharply declined compared to the previous year due to increased promotional expenses in response to the domestic market slump and rising management costs including export expenses such as maritime freight.

Nongshim plans to achieve results in the fourth quarter focusing on new products and the U.S. market. A Nongshim official said, “We plan to officially launch Shin Ramyun Tomba, which received a strong response domestically, in the global market in the fourth quarter, and through the effect of expanding the cup noodle line at the U.S. subsidiary, which started operations in October, we will work to improve sales and profits.”