Nongshim Sees Full Impact of Price Hikes, Overseas Expansion Also Expected [Click e-Stock]

Sales Decline Narrows After Price Hikes
Rebound in Sight

Nongshim is expected to deliver solid results next year as the effects of price increases for its products both domestically and internationally are fully reflected. Its proactive overseas expansion is also expected to contribute to scaling up its sales base.

On the 30th, Korea Investment & Securities maintained its target price for Nongshim at 600,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 434,000 won.

Next year's performance is projected to reach 3.7879 trillion won in sales and 242.5 billion won in operating profit. Compared to this year's estimates, sales are expected to increase by 7.1% and operating profit by 21.9%. The sharp increase in operating profit is attributed to the impact of price hikes at both its domestic and North American subsidiaries. In addition, demand is expected to recover and promotional expenses are forecast to decrease.

Previously, in March, Nongshim raised the prices of 17 types of domestic ramen and snacks by an average of 7.2%. In July, it also raised the prices of all products sold in the United States by 10%. After the price increases, domestic ramen sales volume declined, but the rate of decline began to narrow from the third quarter. In the United States, with the launch of fully localized products, shipment volumes are expected to rebound starting next year.

Nongshim's aggressive overseas sales expansion strategy is expected to continue next year. After launching Tom Yum Kung-flavored Shin Ramyun in the fourth quarter of 2023, the company accelerated its localization strategy by launching Shin Ramyun Tumba in the fourth quarter of last year. As of the third quarter of this year, Shin Ramyun Tumba has been introduced to overseas retailers such as Target and Publix, and is expected to enter Walmart and Costco in the future.

Kang Eunji, a researcher at Korea Investment & Securities, explained, "With recent collaborations with K-Pop Demon Hunters and the push for localization strategies, expectations for overseas business growth are rising. Now is the time to focus on the momentum for performance improvement, which will be driven by the effects of price increases."

On October 18th, Nongshim held a campaign in New York's Times Square to celebrate the launch of Shin Ramyun in collaboration with the Netflix animation "K-Pop Demon Hunters." Photo by Yonhap News Agency