Sluggish Domestic Food Consumption Leads to 30% Drop in Food Operating Profit
North American and European K-Food Sales Grow, Led by Bibigo
Bio and Feed Businesses Affected by Base Effect and Price Decline
Due to sluggish domestic market conditions, CJ CheilJedang was unable to avoid underwhelming first-quarter results. In contrast, the company’s overseas food business, led by K-food brands such as Bibigo, continued to show growth.
On May 13, CJ CheilJedang announced through a regulatory filing that its consolidated sales for the first quarter of this year were KRW 7.2085 trillion, with operating profit at KRW 333.2 billion. These figures represent decreases of 0.1% and 11.4%, respectively, compared to the same period last year. Excluding its logistics subsidiary, CJ Logistics, the company reported standalone sales of KRW 4.3625 trillion, down 1.8%, and operating profit of KRW 246.3 billion, down 7.8%.
The main reason for the decline in performance was sluggish domestic food consumption. The food business division recorded operating profit of KRW 128.6 billion, a 30% decrease from the previous year. Although sales during the same period increased by 3% to KRW 2.9246 trillion, this was not enough to offset the decline in profitability. The company explained, "Online sales increased by 33% thanks to the digital transformation of processed foods, but overall domestic consumption did not recover, resulting in stagnant sales." They added, "The earlier-than-usual Lunar New Year holiday this year also had an impact, as a portion of gift set sales was reflected in the fourth quarter of last year."
The overseas food business performed well. Of the total food sales, KRW 1.4881 trillion (50.9%) came from overseas markets, an increase of 8% compared to the previous year. In North America, sales of ready-to-eat meals such as shelf-stable rice, pizza, and rolls, led by the Bibigo brand, drove total sales to KRW 1.247 trillion. In China and Japan, strong sales of dumplings resulted in double-digit growth rates.
The European and Oceania markets also showed growth. In Europe, sales increased by 36% due to the launch of a variety of products such as dumplings, hot dogs, and gochujang in major countries including Germany, the UK, and France. In Oceania, sales rose by 25% as products entered major distribution channels such as Woolworths, Coles, and IGA.
The bio business recorded sales of KRW 895.4 billion, down 12% year-on-year, and operating profit of KRW 82.5 billion, down 16%. This was due to the base effect of high-value-added products such as tryptophan and specialty amino acids. However, some profitability was improved as the European Union imposed anti-dumping duties on Chinese lysine, leading to a rebound in the lysine market, and the share of specialty products such as arginine and valine exceeded 20%.
The feed and livestock division (CJ Feed&Care) saw sales decrease by 8% to KRW 542.5 billion. However, operating profit turned positive to KRW 35.2 billion. This was attributed to improvements in the Vietnam and Indonesia businesses and profitability-focused restructuring, despite falling feed prices.
CJ CheilJedang plans to strengthen its overseas market strategy by expanding global strategic products (GSP) and diversifying its regional presence. Domestically, the company aims to overcome sluggish demand by transitioning to digital platforms and developing products focused on health and convenience foods. The bio business also intends to improve performance by expanding the TasteNrich product lineup based on its 11 global production sites.
A CJ CheilJedang representative stated, "Through our OnlyOne strategy, we will enhance our global competitiveness while simultaneously strengthening profitability and the foundation for future growth."
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