Dumplings and Hetbahn Soar Overseas but High Oil Prices Weigh Down... CJ CheilJedang’s Q2 Operating Profit Falls 18.4%

Rising Raw Material Costs Impact Profitability

Sales Up 10.2% Year-on-Year

Strong Performance of Global Strategic Products in the Americas and Beyond

Business Rebalancing to Accelerate Strategic Execution from Q3

CJ CheilJedang offset the decline in domestic sales in the second quarter of this year with strong overseas performance of its Global Strategic Products (GSP) such as dumplings and Hetbahn. However, the company could not prevent a decline in profitability as the prices of raw and subsidiary materials rose due to high exchange rates and high oil prices.

CJ CheilJedang announced on the 11th that its consolidated operating profit for the second quarter of this year reached 161.9 billion won, representing a decrease of 18.4% compared with the same period last year based on provisional figures. During the same period, sales were 4.195 trillion won, marking a 10.2% increase, but non-operating expenses increased due to foreign exchange and derivative trading losses stemming from rising exchange rates and grain prices. As a result, the company posted a net loss of 23.9 billion won, swinging to the red. Consolidated second quarter sales, including its subsidiary CJ Logistics, totaled 7.3621 trillion won, up 9.5% from a year earlier, while operating profit dropped 18.5% to 257.6 billion won.

By business segment, the core Food Business unit posted sales of 2.8441 trillion won, up 5.8% year-on-year, but operating profit fell 21.3% to 70.9 billion won. The company explained that profitability was dampened amid sluggish domestic demand, increasing cost burdens due to high oil prices, and rising raw material costs.

However, overseas Food Business sales provided some relief, growing 10.1% year-on-year to 1.5072 trillion won. In the Americas, sales volumes of dumplings and Hetbahn grew 31% and 49%, respectively, compared to the previous year, driving growth. In Europe, sales rose 19% thanks to strong performance of its main GSPs—dumplings, chicken, and noodles. In the Asia-Pacific (APAC) region, sales increased 21% as sales volumes of products like dumplings, rolls, and seaweed in both ambient and frozen segments rose.

CJ CheilJedang Center

Domestic Food Business sales inched up just 1.4% to 1.3369 trillion won. Processed food sales grew 4% from the same period the previous year, but sales in materials businesses such as starch syrup declined 2% due to raw material cost hikes from high exchange rates and a drop in selling prices. Elsewhere, the Bio Business division generated 1.3509 trillion won in second quarter sales, up 20.8% year-on-year as sales of specialty products and key items like lysine increased. However, with intensifying competition in the segment and delayed recovery in selling prices, operating profit decreased 15.9% to 91 billion won.

CJ CheilJedang plans to accelerate the execution of strategies aligned with each business's core nature and objectives from the third quarter onward, based on a recently implemented business rebalancing. Previously, on the first of last month, the company carried out rebalancing to proactively respond to rapidly changing business environments and future uncertainties, reorganizing its formerly two-track structure of 'Food' and 'Bio' into three units: 'Lifestyle Food', 'Tech-based Ingredients', and 'Core Ingredients'. The company also expressed its intention to decisively discontinue low-growth or low-profitability marginal businesses.

Specifically, the Lifestyle Food business unit aims to further expand the sales of its main GSPs in line with the rapid growth of global K-food and to defend profitability in the domestic market through a strategy focused on high-yield categories. The Tech-based Ingredients unit intends to pursue continued new business sales growth, while the Core Ingredients unit will leverage a favorable external environment to speed up its performance recovery in the second half of the year.

A representative from CJ CheilJedang stated, "We will accelerate entry into new global markets by leveraging our Global Strategic Products such as dumplings and Hetbahn, and focus on improving profitability by expanding bio business sales and cutting manufacturing costs and fixed expenses."

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