Manufacturers of Convenience Foods, Ramen, and Confectionery See Sluggish Q3 Performance
Exports and Overseas Business Maintain Growth
Domestic Business Faces Prolonged Struggles
The food industry received somewhat disappointing business results for the third quarter this year due to the domestic market slump, despite steady achievements in overseas operations.
According to related industry sources on the 15th, CJ CheilJedang, the number one company in the food industry, reported a consolidated third-quarter operating profit of 276.4 billion KRW, excluding the performance of its subsidiary CJ Logistics, which increased by 0.4% compared to the same period last year, while sales decreased by 1.1% to 4.6204 trillion KRW. However, focusing only on its core food business, sales dropped by 1.1% to 2.9721 trillion KRW, and operating profit fell sharply by 31.1% to 161.3 billion KRW. Despite growth in overseas markets, the domestic food business sales declined by 6.1% year-on-year to 1.569 trillion KRW due to sluggish domestic consumption and cost burdens. During the same period, overseas food business sales increased by 5.1% to 1.4031 trillion KRW compared to a year earlier.
Daesang also performed well with a third-quarter operating profit of 110.2 billion KRW, up 30.3% year-on-year, and sales increased by 3% to 3.117 trillion KRW, but its food business operating profit decreased by 12.9%. A Daesang official explained, "Exports and overseas sales volumes of key items such as kimchi, sauces, convenience foods, and seaweed increased, and the profitability of the materials business and consolidated subsidiaries improved, but the domestic slump caused a decline in operating profit in the food business."
The ramen industry was not immune to the domestic market downturn. For example, Nongshim's third-quarter operating profit was 37.6 billion KRW, down 32.5% from the same period last year. Sales decreased by 0.6% to 850.4 billion KRW. Overseas business showed balanced growth centered on exports (+33.5%) with increases in the U.S. (+1.4%), Japan (+20.3%), Australia (+15.4%), and Vietnam (+20.4%), but domestic business saw sales declines in the snack (-6.6%) and beverage (-13.8%) categories.
Ottogi's third-quarter operating profit also fell by 23.4% year-on-year to 63.6 billion KRW, and sales decreased by 0.5% to 904.1 billion KRW. Ottogi explained, "Overseas sales and profits increased slightly, but domestic sales growth was minimal, and increased selling expenses for sales led to profit declines." However, among the three major ramen companies, Samyang Foods, with an overseas sales ratio of 78%, posted third-quarter sales of 438.9 billion KRW and operating profit of 87.3 billion KRW, marking increases of 31% and 101% respectively compared to the same period last year.
Additionally, Orion's third-quarter operating profit was 137.1 billion KRW, down 2.6% year-on-year, and sales increased slightly by 1.1% to 774.9 billion KRW. During the same period, Lotte Wellfood's operating profit decreased by 5.7% to 76 billion KRW, and sales fell by 0.7% to 1.0785 trillion KRW.
An industry insider said, "Due to the economic downturn and high inflation, domestic consumers are tightening their spending, causing stagnation or a prolonged decline in the domestic market. Coupled with rising raw material costs, it is difficult to offset this with growth in overseas business."
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