CJ CheilJedang profit beats forecasts on overseas business
Hyung-Joo Oh
May 14, 2024 (Gmt+09:00)
Golf fans enjoy K-food from a Bibigo booth at the CJ Cup, a professional golf tournament on the PGA Tour, in South Carolina (File photo, courtesy of CJ CheilJedang) South Korean food giant CJ CheilJedang Corp. on Tuesday reported a better-than-expected quarterly profit on healthy overseas businesses and cost cuts while aiming to expand its presence in other countries and strengthen profitability.
The food maker known for its leading brand Bibigo said its operating profit soared 48.7% to 375.9 billion won ($274.6 million) on a consolidated basis in the first quarter. The profit was higher than the average estimate of 360.9 billion won in a poll of analysts by Yonhap Infomax, the financial data firm of South Korea’s Yonhap News Agency.
CJ CheilJedang’s net profit more than tripled to 154.6 billion won in the January-March period, while sales grew 2% to 7.2 trillion won.
Strong global businesses with higher operating profit margins and active cost-cutting measures for domestic units contributed to the healthy quarterly earnings, the flagship unit of South Korea’s food-to-entertainment conglomerate CJ Group said.
“The company aims to accelerate its expansions in new overseas markets to become a leading global market leader while maintaining its efforts to maximize profitability,” said a company official.
CJ CheilJedang plans to establish a unit in France, which is hosting this summer's Olympic Games in Paris, this year to cement its dominance in the K-food industry in Europe.
In South Korea, it is set to increase demand for processed foods with new products and continue management efficiency.
STRONG FOOD BUSINESS
Its food division logged an operating profit of 184.5 billion won in the first quarter, up 37.7% on-year, with sales up 2.6% to 2.8 trillion won.
The overseas food operation reported quarterly revenue of 1.4 trillion won thanks to strong growth in key markets such as North America through strategic products such as Bibigo Mandu.
The frozen dumplings topped the North American market with a market share more than tripling that of the No. 2 product, while sales of frozen rice items rose 23%.
Revenues in Europe and Australia advanced 45% and 70%, respectively, as the company focused on the main distribution channels in those markets.
Sales of frozen fried chicken and instant rice products grew 25% and 23%, respectively, becoming the company’s new growth drivers. Customers try Bibigo Mandu at a food truck event in Vietnam (File photo, courtesy of CJ CheilJedang) In South Korea, the sales volume of main items such as instant Hetbahn rice increased by more than 10% thanks to cooperation with new online market platforms. AliExpress, an e-commerce arm of China’s Alibaba Group, started selling CJ CheilJedang’s products in South Korea in March.
HEALTHY BIO BUSINESS
CJ CheilJedang’s bio division saw a 55% jump in its quarterly operating profit to 97.8 billion won with sales up 3% to 1 trillion won as the company reorganized its business structure to concentrate on premium items.
Sales of its tryptophan, an amino acid needed for normal growth in infants and for the production and maintenance of the body's proteins, muscles, enzymes, and neurotransmitters, rose 44%. CJ CheilJedang is the world’s top tryptophan producer. Revenue from the company’s specialty amino acids grew 32%.
Sales of TasteNrich, the company’s savory flavor enhancer, soared 62% as new demand increased.
The company aims to increase sales of high-end specialty products to improve the profitability of the bio division while speeding up the biofoundry business.