[아시아경제 구은모 기자] Major food companies managed to grow in size in the third quarter amid unfavorable business conditions at home and abroad, such as US interest rate hikes and increases in raw material prices following Russia’s invasion of Ukraine. However, although CJ CheilJedang managed to defend its performance by significantly increasing sales in overseas markets, Daesang and Dongwon F&B left concerns in terms of profitability.
According to the Electronic Disclosure System of the Financial Supervision Service (DART) on the 19th, the operating profit of CJ CheilJedang (excluding CJ Logistics) in the third quarter of this year was 386.7 billion won, up 20.0% from the same period last year. Sales also increased by 21.7% to KRW 5,139.9 billion. This is the first time that quarterly sales, excluding the subsidiary CJ Logistics, exceeded 5 trillion won.
K-Food, with ‘bibigo’ at the forefront, performed well in the foreign market, leading the earnings growth. Bibigo continued to expand its business focusing on bibigo brand Global Strategic Products (GSP), such as dumplings, chicken, processed rice, rolls, K sauce, kimchi, and seaweed, in major business countries including the United States States, while increasing sales of high margin core products and cost structure Profitability improved significantly as a result of improvements.
In particular, the growth and improvement in performance in North America, including US frozen food company Schwan’s, which acquired a 70% stake in February 2019, is noteworthy. Since the acquisition of Schwan’s, market dominance in products such as dumplings and pizza has become evident, and the synergy between K-food content and Schwan’s distribution network is strengthening. Schwan’s operating profit has more than doubled thanks to improved productivity, improved sales promotion efficiency, and reduced fixed costs following sales growth.
In the domestic market, the pre-emptive increase in sales has had an impact, and the company has successfully defended its performance. Previously, CJ CheilJedang raised the prices of bibigo and Hetbahn dumplings in the first half of this year, followed by kimchi and paste price hikes in September. In addition, distribution share expanded in growth channels such as online, business-to-business (B2B), and convenience stores, and responded to cost and cost increases in all directions through cost reduction efforts.
CJ CheilJedang’s sales in overseas markets in the third quarter increased 22.8% from last year to KRW 1,382.2 billion. The domestic market is still ahead of the foreign market in sales (1.6736 trillion won), but the growth rate is 15.1%, falling behind the foreign market by more than 7 points percentage, and the axis of the core market shifts from domestic to overseas.
While CJ CheilJedang managed to protect profitability by significantly increasing sales in overseas markets, Daesang and Dongwon F&B managed to grow in size thanks to the impact of price increases.
Daesang posted 1.616 trillion won in sales on a consolidated basis in the third quarter, up 15.9% from the same period last year, but its operating profit fell 4.0% to 34.4 billion won. Sales of instant convenience foods and fresh foods increased as sales of foods such as kimchi, seaweed, and tteokbokki grew evenly thanks to the popularity of K-Food, but operating profit declined due to rising prices of raw materials at home and abroad. During this period, the price of imported starch, molasses, and raw sugar increased by up to 50%, which was largely affected.
Dongwon F&B also recorded consolidated sales in the third quarter, up 15.5% year-on-year to 1,114.6 billion won, but operating profit fell 8.0% to 45.1 billion won, and profitability declined. Dongwon F&B led sales growth by showing an equal growth trend in all business areas as the restaurant market recovered and secured large-scale B2B catering customers. However, unit prices of major raw materials such as pork, cheese, and powdered milk increased due to appreciation gains, including a strong dollar, and logistics costs increased due to oil price increases, which led to a decrease in profits.
Reporter Goo Eun-mo gooeunmo@asiae.co.kr
