Lotte Chilsung Beverage's Q2 Operating Profit Falls 10.4% Year-on-Year to 55.8 Billion Won

Sales Reach 1.1129 Trillion Won in Q2, Up 2.4%
Burdens from Rising Raw Material and Logistics Costs

Lotte Chilsung Beverage saw a double-digit decline in operating profit for the second quarter of this year (April–June) despite continued sales growth, due to rising raw material costs and increased logistics expenses.

On August 5, Lotte Chilsung Beverage announced that consolidated sales for the second quarter of this year reached 1.1129 trillion won, up 2.4% from the same period last year, while operating profit was 55.8 billion won, a decrease of 10.4% compared to the previous year.

In the beverage segment, standalone sales totaled 500.5 billion won, a 1.7% year-on-year increase in the second quarter, while operating profit declined 13.2% to 20.5 billion won. Weakened domestic consumption, high exchange rates, and increased costs for key raw and subsidiary materials and logistics due to the Middle East conflict continued to place pressure on business expenses, leading to a decline in profitability.

By product category, sales of sports drinks grew by 8.5% thanks to early heatwaves and increased outdoor activities. Carbonated beverages expanded by 3.1% due to the growing zero-calorie trend and the peak seasonal effect. Coffee beverages saw a 4.1% increase in sales, boosted by the rising demand for ready-to-drink (RTD) coffee and the launch of new products. Overseas beverage exports such as 'Milkis', 'Let’s Be', and 'Aloe Juice' recorded robust growth, with sales up 9.8% compared to the same period last year.

For the liquor segment, standalone sales for the second quarter were 195.1 billion won, a 3.2% increase over the previous year. Operating profit surged 156.6% from the second quarter last year, reaching 7.5 billion won. The company attributed this to product development that matches consumer trends and expanded distribution channels, with steady growth in RTD products, wine, soju, and cheongju. In particular, RTD liquor sales based on 'Soonharijin' jumped 143.3% year-on-year. Soju sales rose by 1.9%, driven by increased sales of 'Chum Churum' and 'Sero', while cheongju sales climbed 1.8% thanks to the success of 'Subok One Cup'. Wine sales advanced 8.8%.

The global division saw sales increase 3.4% year-on-year in the second quarter to 458.5 billion won, while operating profit dropped 27.0% to 26.1 billion won over the same period. Profitability declined due to the burden of rising raw material prices and logistics costs, which stemmed from high oil prices and geopolitical issues. Overseas subsidiaries accounted for approximately 41% of total sales, and this ratio climbed to about 47% when export performance is included.

Lotte Chilsung Beverage is targeting full-year consolidated sales of 4.1 trillion won and operating profit of 200 billion won. For the first half, sales stood at 2.0654 trillion won, up 3.4% from the same period last year, while operating profit rose 18.6% to 103.6 billion won. In the beverage segment, first-half sales reached 914.6 billion won, up 1.6%, and operating profit increased 13.5% to 41.6 billion won. The liquor segment posted sales of 389.3 billion won, a 1.9% rise, and operating profit expanded 34.5% to 23 billion won.

A representative from Lotte Chilsung Beverage stated, "Although the second quarter this year brought challenges to profitability due to high inflation, increased raw material prices, and the burden of global logistics costs, we maintained sales growth on the strength of steady growth in the liquor business, the expansion of the RTD category, and increased beverage exports. We plan to focus our capabilities on further enhancing our fundamental competitiveness and laying a stable foundation for growth by fostering global brands and driving profitability-centered structural improvements."

This content was produced with the assistance of AI translation services.