Janginramyeon Slump Drags Harim Into 150 Billion Won Loss Trap... Yangjae Logistics Complex Now Shaking [Why&Next]

Harim Industrial's operating loss widened last year
Annual sales volume of The Miseek "Janginramyeon"
New product "Samyang 1963" catches up in just three months
500 billion won injection from holding company and loans from affiliates
Concerns

Kim Hongguk, chairman of Harim Group, is introducing Deomisik Jangin Ramyeon. Provided by Harim.

Harim Industrial, which has been pushing its premium ready-meal brand "The Miseik," is now faltering. The company has scaled up since entering the food manufacturing market, but its profitability has deteriorated and its losses have widened. Harim Industrial, 10% owned by Harim Holdings, is in charge of developing the Yangjae Urban High-Tech Logistics Complex, a key project for the group, but concerns are emerging even before construction begins as worsening performance increases its financial burden.

According to the Financial Supervisory Service on February 13, Harim Industrial's sales last year came to 109.3 billion won, up 36% from 80.2 billion won a year earlier. The expansion of its ready-meal product lineup is seen as having driven top-line growth. Despite the increase in sales, the size of its losses grew. Over the same period, operating loss widened by about 19 billion won to 146.6 billion won from 127.6 billion won a year earlier. Net loss reached 169 billion won. Compared with the net profit of 9.9 billion won recorded in 2024, the company fell back into the red within just one year.

The market views this as the result of cost burdens accumulating at a pace that outstripped sales growth. Harim Industrial explains that fixed costs have increased as marketing expenses to launch new products and raise brand awareness, along with production and logistics costs, all rose simultaneously.

Pouring water into a bottomless jar... Is there an exit for "The Miseik"?

The core business of Harim Industrial is "The Miseik." Since its launch in October 2021, The Miseik has expanded its lineup from Jangin Ramyeon to include instant rice, dumplings, soups and stews, and sauces. Rather than relying on a single hit product, the company aimed to solidify its presence across the broader premium food market by expanding its portfolio.

This choice was a group-level decision. Kim Hongguk, chairman of Harim Group, selected the ready-meal business as a breakthrough for Harim Industrial, which had fallen into sluggish performance. He judged that there were good prospects for ready meals using high-quality ingredients amid the increase in single-person households and the spread of the kitchen-less trend.

Since the launch of The Miseik, Harim Industrial has grown in scale. Sales jumped from 21.6 billion won in 2021 to 109.3 billion won last year, an increase of about fivefold. However, its financial condition has deteriorated in the opposite direction. During this period, operating loss expanded from 58.8 billion won to 146.6 billion won.

The continued losses at Harim Industrial are attributed to the underperformance of its flagship product The Miseik and changes in its sales structure. From 2020 to the first half of 2021, Harim Industrial operated its business mainly on a business-to-business (B2B) basis, but it began to focus in earnest on business-to-consumer (B2C) transactions from the second half of 2021, when it launched The Miseik brand. Accordingly, it moved away from a single B2B sales organization and created a dedicated offline team in charge of hypermarkets and retail outlets, as well as a dedicated online team, and in 2023 it further expanded to include a special-sales organization.

As a result, its sales channels changed significantly. As of the third quarter of last year, about 18% of Harim Industrial's sales came from B2B, and most of the remainder came from B2C channels. Offline distribution channels accounted for the largest share at 42%, while online channels made up 39%. In contrast, special sales accounted for only 1%. As the main axis of sales shifted to B2C, analysts say that the burdens of promotional expenses, marketing costs, and logistics costs all increased at the same time.

Struggling in the premium ramyeon market

The Miseik "Jangin Ramyeon" is widely viewed as having delivered only modest results in the premium ramyeon market compared with competitors. Launched in October 2021 with a high-end strategy at 2,200 won per pack (convenience store price), Jangin Ramyeon has been backed by aggressive marketing and expanded distribution, but industry observers point out that the market response has fallen short of expectations.

The annual sales of Jangin Ramyeon last year are estimated at around 45 billion won. Ramyeon accounts for about 42% of Harim Industrial's total sales. Converted into volume, this corresponds to roughly 20 million packs per year.

By contrast, premium ramyeon products recently launched by competitors have matched or exceeded Jangin Ramyeon's annual sales scale in a short period of time. Nongshim released "Shin Ramyun Gold" last month at 1,500 won per pack and sold more than 10 million packs in just one month. Based on the consumer price and a simple calculation, this translates into about 15 billion won in sales within a month of its launch.

Samyang Foods' "Samyang 1963," launched in November last year, sold 7 million packs in one month, generating about 13.3 billion won in sales. In just over three months, its cumulative sales volume rose to 20 million packs, and cumulative sales are estimated at around 38 billion won.

In other words, competitors have caught up with the annual sales scale that Harim Industrial built up over four years with Jangin Ramyeon using a single premium ramyeon product in just about three months. Analysts say Jangin Ramyeon has failed to establish itself as a decisive hit product in the premium ramyeon market. A food industry official said, "In the premium ramyeon market, brand power and initial pull at launch matter more than price," adding, "There is a clear difference between Jangin Ramyeon, which has been on the market for an extended period, and rival products whose sales surged immediately after launch."

Facing a cash crunch ahead of a 7 trillion won mega-project

As operating losses balloon, Harim Industrial is receiving capital injections from its holding company and affiliates. Harim Holdings recently participated in a 50 billion won rights offering by Harim Industrial, and it also raised 10 billion won in working capital through commercial paper (CP) from Eco Capital, a group financial affiliate. Although a total of 60 billion won in internal funding has been provided, the company's financial condition is still seen as unstable. According to Harim Industrial's audit report, its cash and cash equivalents stood at only 5.8 billion won at the end of 2024.

As of the end of last year, Harim Industrial's total assets amounted to 2.4522 trillion won, up from 2.2519 trillion won a year earlier, but over the same period its total liabilities swelled by more than 300 billion won to 1.3635 trillion won. Assets increased due to a revaluation of the land value of the Yangjae-dong logistics complex site in Seoul. As losses accumulated, its accumulated deficit expanded to 560 billion won as of 2024, and with last year's net loss growing further, concerns over capital erosion prompted the company to carry out the asset revaluation.

Total equity fell from 1.2078 trillion won to 1.0887 trillion won. Market watchers assess that its capital buffer has in fact weakened due to cumulative operating losses. As a result, its debt-to-equity ratio rose from 86% a year earlier to 125% last year.

This raises concerns about funding for Harim Group's mega logistics complex development project in Yangjae-dong, Seoul. In 2016, Harim Group purchased the Yangjae-dong cargo terminal site (86,003 square meters) for 452.5 billion won and has since been pushing to develop it into a logistics complex. Construction has been delayed by a legal dispute with the Seoul Metropolitan Government that lasted more than 10 years, and the city finally approved and announced the "Yangjae Urban High-Tech Logistics Complex Development Project" plan in February 2024.

However, Harim abruptly changed its business plan in December 2024, delaying the start of construction, and with the approval of the revised plan scheduled to be completed in August 2025, the project is now awaiting building permit, the final hurdle.