CJ CheilJedang dishes up 77.5% on-year increase in Q1 operating profit

CJ CheilJedang's logo [CJ CHEILJEDANG]

CJ CheilJedang reported a first quarter operating profit of 267 billion won ($195.1 million) on Tuesday, an on-year increase of 77.5 percent, driven by a strong performance in its overseas business and extensive cost cutting measures domestically.

To continue the upward trajectory, it plans to expand its K-food dominance in Europe by establishing a local subsidiary in France, where this year's Olympics will be held. The company currently has local subsidiaries based in the U.K., Australia and Thailand.

However, the figure fell short of the market consensus of 352.5 billion won compiled by market tracker FnGuide.

Sales increased 0.8 percent to 4.4 trillion won from a year earlier, the company said in a press release.

Its food business did well, posting 184.5 billion won in operating profit and 2.8 trillion won in sales, up 37.7 percent and 2.6 percent from the previous year, respectively.

CJ attributed the earnings’ surge to the increased sales of crown jewel products such as its Bibigo dumplings, instant rice and Gourmet Soba Chicken given that they all rose more than 10 percent, with frozen chicken and instant rice rising 25 percent and 23 percent each to emerge as the products that secured a foothold for growth momentum in the company's overseas food business.

Overseas sales posted growth of 1.4 trillion won. The company saw a significant jump in Australia and Europe, in particular, at 70 percent and 45 percent, respectively.

The company focused on securing major distribution channels to make a foray into the untapped market for its kind of products.

The bio business, meanwhile, logged a 55 percent gain in operating profit and 3 percent rise in sales in the first quarter from a year ago.

CJ Feed&Care, an animal feed subsidiary, however, recorded an operating loss of 15.2 billion, with sales coming in at 591.1 billion won, down 10 percent on year.

“To take the leap to becoming a global leading player, CJ CheilJedang continues to facilitate its expansion into untapped overseas markets and to maximize its profitability,” said a company official.

BY CHOI HAE-JIN [choi.haejin@joongang.co.kr]