Profitability Declines Across Overseas Markets
Gross Profit Rises 3.1% Year-on-Year
Innocean, the advertising agency affiliate of Hyundai Motor Group, saw its profitability decline in the second quarter due to the impact of the global economic slowdown.
On August 7, Innocean announced in a regulatory filing that its consolidated operating profit for the second quarter of this year was provisionally tallied at KRW 36.4 billion, a decrease of 0.7% compared to the same period last year. During the same period, net profit fell by 11% to KRW 23.8 billion.
Gross profit, a key performance indicator in the advertising industry (calculated as revenue minus cost of sales), reached KRW 241.5 billion, up 3.1% year-on-year. Of this, KRW 56.7 billion was generated domestically and KRW 184.8 billion overseas. By region, the Americas accounted for KRW 128.5 billion, Europe for KRW 30.2 billion, and other regions for KRW 26.1 billion.
Looking at gross profit, the domestic market grew thanks to increased volume from events such as the Seoul Mobility Show and electric vehicle (EV) campaigns, as well as strong performance by subsidiaries like InnoceanS. Overseas, despite expanding external uncertainties, the company achieved top-line growth in all regions.
However, profitability deteriorated as non-affiliate volume declined overseas due to the global economic slowdown. In the second quarter, domestic operating profit was KRW 4.9 billion, up 122% year-on-year. In contrast, operating profit in the Americas dropped by 9% to KRW 22.8 billion, due to a decrease in non-affiliate volume and delays in the Mexico campaign. Operating profit in Europe also fell by 5% year-on-year to KRW 5.9 billion. Although media volume for the EV3 and Casper Electric increased, selling and administrative expenses rose due to increased headcount in countries such as Germany. Additionally, the departure of existing advertisers from the Welcome Group negatively affected profitability.
In the second half of the year, Innocean plans to continue pursuing profitability enhancement, diversification of revenue streams, and mergers and acquisitions (M&A) investments in order to increase corporate and shareholder value. An Innocean representative stated, "In the second half, we will continue flexible marketing efforts, such as reducing our own production costs and proposing media efficiency to advertisers," adding, "We also plan to actively pursue sales activities to secure non-affiliate advertisers."
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