CJ CheilJedang profit slumps, but food holds strong

[CJ CHEILJEDANG]

Korean food manufacturer CJ CheilJedang reported a 28.8 percent on-year decline in third-quarter operating profit, totaling 275.3 billion won ($208 million), due partly to slumps in its nonfood businesses.

Third-quarter revenue dropped 9.1 percent to 4.67 trillion won compared to the same period last year.

The company saw a positive turn in its food division, which was profitable for the first time this year. Revenue dipped 2 percent to 3 trillion won, but operating profit saw a 12 percent increase to 234.1 billion won.

“With our flagship Hetbahn (instant rice) and bibigo brands, we tapped into the growing preference for home-cooked meals amid a decline in dining out and saw increased sales of domestic processed foods,” explained a CJ CheilJedang official. “Streamlining selling, general & administrative expenses [by reducing unnecessary marketing expenses] also contributed greatly, turning into profits.”

CJ CheilJedang's food business expanded internationally, focusing on its global strategic products. In North America, the company secured more than 50 percent of grocery channel sales in mandu (dumplings), and Schwan's Red Baron pizza brand outpaced the competition and solidified its top spot. Growth was also evident in Europe's and Oceania's markets, marked by product launches in British channels like Ocado and Asda, as well as sales of bibigo's mandu through Woolworths, Australia's largest supermarket chain.

The company faced challenges in the biobusiness sector, mainly with feed additives, attributed to burdens from last year’s high base for bulky amino acids and business slowdown for Brazilian soybean processor CJ Selecta. Revenue in that segment saw a 17 percent decrease, amounting to 898.7 billion won, and operating profit contracted by 90 percent to 10.2 billion won.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]