Nongshim's 61st Regular Shareholders' Meeting on the 21st
"Operating Profit Margin of 4-5% Is Also a Problem"
Chairman Shin Dongwon Expresses "Agreement"
"While Samyang Foods' stock price rose to 900,000 won, Nongshim's fell further."
On the 21st, at the regular shareholders' meeting held at Nongshim headquarters in Dongjak-gu, Seoul, a shareholder who claimed to hold a 1% stake in Nongshim expressed concerns about the company's recent corporate value. He said, "Nongshim's stock price has increased from 350,000 won in 2015 to 420,000 won now, but the stock price of Samyang Foods in the same industry has risen from 20,000 won to 900,000 won." He added, "The competitiveness of a company is reflected in its market capitalization, and it is disappointing that Nongshim does not seem to feel a sense of crisis."
The shareholder's remarks continued for about 20 minutes. He stated, "The operating profit margin of the ramen industry is somewhat lacking compared to Japanese companies," and added, "The operating profit margin is only about 4-5%, and if this does not change, it will be difficult."
In response, Shin Dong-won, Chairman of Nongshim, said, "I agree with the remarks," and promised, "We will do our best to enhance shareholder value." CEO Lee Byung-hak of Nongshim also said, "We are currently pursuing global management, sales and operating profit margin targets, and other overseas global business-related areas at Nongshim," adding, "We will supplement any shortcomings and proceed accordingly."
That day, Nongshim's regular shareholders' meeting attracted attention as 'Unlocking Value,' a group of minority shareholders, recently sent shareholder letters. Unlocking Value pointed out Nongshim's low operating profit margin and cited high internal transactions as the background. They criticized the structure in which a significant portion of the profits earned through internal transactions by Nongshim Taekyung, a subsidiary of Nongshim Holdings, the holding company of the Nongshim Group, is passed on to the owner family. Nongshim posted sales of 3.4387 trillion won and operating profit of 163.1 billion won last year, recording an operating profit margin of 4.7%.
Nongshim maintains that it continues efforts to reduce internal transactions. In fact, Nongshim's internal transaction amount decreased by about 7.7% (48.5 billion won) compared to the previous year. During the same period, the proportion of internal transactions also dropped from 26.4% to 23.4%.
Meanwhile, at the shareholders' meeting attended by about 100 shareholders, the following items were approved as originally proposed: ▲approval of financial statements ▲appointment of Lee Byung-hak as inside director ▲appointment of Lee Hee-hwan as outside director ▲appointment of Lee Hee-hwan as audit committee member ▲partial amendment of articles of incorporation ▲revision of executive retirement pay regulations ▲approval of director remuneration limits.
In his greeting, CEO Lee Byung-hak said, "This year marks the 60th anniversary of Nongshim's founding, an important milestone," adding, "Accordingly, we have set this year's management guideline as 'Global Change & Challenge' and will renew our determination and grow by recognizing the domestic and overseas markets as one market."
To implement the management guideline, he presented three strategies: strengthening competitiveness in overseas markets, improving the profit structure in the domestic market, and realizing Vision 2030.
CEO Lee emphasized, "To overcome the slowdown in domestic market growth and fierce competition, we will actively discover and expand opportunities in overseas markets through new product development suitable for local markets, brand strategies, optimized sales channel expansion, and establishment of a global marketing system." He added, "In the domestic market, we will focus on improving low-profit businesses and channels, cost efficiency, and cost structure improvement, and utilize the secured resources for global business growth and capability enhancement."
He continued, "We have set a goal to double sales and operating profit by 2030 and expand the overseas business sales ratio to 58%. To achieve this, we will accelerate noodle business growth centered on key overseas countries, nurture the snack business as a second core business, and secure sustainable competitiveness through organizational restructuring from a global integrated perspective."
On the same day, Nongshim also announced plans to actively expand its smart farm business. Nongshim has been researching smart farm technology for efficient and safe crop cultivation for decades. Recently, it achieved visible results such as exporting smart farm containers to Oman. Nongshim plans to actively promote the export of smart farm technology to Middle Eastern regions with low food self-sufficiency rates, starting with Oman, followed by Qatar and the United Arab Emirates (UAE).
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