Repeated Price Hikes Fail to Help... Food Companies Face Gloomy Third Quarter

Price Hikes by Over 60 Companies, Limited Rebound Amid Weakened Consumption
'Buldak' Booming Overseas... Samyang Foods' Operating Margin Projected at 22%
Operating Profit Expected to Decline for Lotte Wellfood, Ottogi, and Others

Although food companies have continued to raise product prices this year, their third-quarter results are expected to fall short of expectations. While cost pressures have eased, domestic consumption has not recovered. However, companies that are performing well in overseas markets are likely to fare better.

According to FN Guide and industry sources on October 14, the combined sales of the top 10 major food companies for the third quarter of this year are projected to reach 16.9132 trillion won, an increase of 4.6% compared to the same period last year (16.1628 trillion won). However, operating profit is expected to increase by only 0.4%, reaching 1.174 trillion won.

A ramen sales display at a large supermarket in Seoul on the 10th. 2025.06.10

More than 60 major domestic food companies have raised product prices by about 2% to 20% this year. The price hikes have spread across all categories, including not only ramen and processed foods but also confectionery, oils and fats, and beverages. However, as prolonged inflation has reduced consumers' spending power, the price increases have not been fully reflected in company earnings.

Stagnant Profitability Amid Weak Domestic Demand

CJ CheilJedang is expected to post consolidated sales of 7.642 trillion won and an operating profit of 365 billion won in the third quarter. While sales increased by 3% year-on-year, operating profit fell by 12%. One-off expenses such as the replacement of the enterprise resource planning (ERP) system and sluggish performance in the bio sector were cited as factors. However, the food division alone is analyzed to have maintained stability at a level similar to last year.

Lotte Wellfood is expected to record sales of 1.1306 trillion won, but operating profit remains flat at 76.2 billion won. This is attributed to the continued high price of cocoa, a key raw material, which hovered around 9,000 dollars per ton, as well as one-off costs related to the transition to a new ERP system. Just a few years ago, cocoa prices were around 2,500 dollars per ton, but since 2023, prices have surged, reaching an all-time high of 12,931 dollars in mid-December last year. In the first half of this year, prices remained in the 9,000 dollar per ton range but have been falling since September. A Lotte Wellfood official stated, "The high-cost cocoa inventory has not yet been depleted, so cost pressures persist," and added, "We expect the impact of falling cocoa prices to be reflected in our results from the fourth quarter onward."

Ottogi's third-quarter sales are expected to reach 941.9 billion won, up 4.1% from last year's 904.1 billion won, but operating profit fell slightly by 5% to 60.4 billion won. The decline in demand for home meal replacements and ready-to-eat foods, as well as increased promotional expenses, have weighed on profitability. Binggrae is also projected to see sales of 485.8 billion won (up 4.7%) and operating profit of 59.9 billion won (down 7%). Frequent rain during the summer limited ice cream sales compared to previous years, while marketing costs for new products increased.

Strong Overseas Performance, Continued Popularity of 'Buldak'

While the domestic market remains sluggish, overseas markets are serving as a pillar of growth. Samyang Foods is expected to post third-quarter sales of 596 billion won and operating profit of 130.9 billion won, up 35.7% and 49.9% year-on-year, respectively, marking an earnings surprise. 'Buldak Bokkeum Myeon' has become a global hit, repeatedly selling out in the United States, China, and Southeast Asia. Hana Securities analyzed, "Samyang Foods will operate six production lines at full capacity through the first half of next year, and annual exports will exceed 2 trillion won."

Nongshim is also expected to see improved results, with sales rising 3.2% to 877.5 billion won and operating profit increasing 23.8% to 46.5 billion won. The effect of price hikes was evident at major subsidiaries in the United States and Japan. In particular, new products such as 'Shin Ramyun Tumba' have been launched in local convenience stores and large supermarkets, driving further growth.

Third-Quarter Trough, Recovery Expected from the Fourth Quarter

However, as raw material prices have stabilized in the second half of the year, profitability is expected to improve from the fourth quarter onward. The price of cocoa raw materials, which was around 8,000 dollars per ton in the third quarter, is expected to fall below 5,000 dollars per ton in the fourth quarter. According to the Korea Agro-Fisheries & Food Trade Corporation (aT) Food Industry Statistics Information, the closing price of cocoa futures (December delivery) on the New York futures market in the United States was 5,945 dollars per ton as of the close on October 9. Prices of other edible raw materials, such as soybean oil and wheat, are also on the decline. During the same period, soybean oil fell to 1,110.68 won, down 108.02 won from 1,218.7 won in July. Wheat prices also dropped to 186.98 won, down 11.4 won from 198.38 won in July.

An industry insider said, "The third quarter appears to be the trough for the overall food sector," and added, "From the fourth quarter onward, as cost pressures ease and the base effect comes into play, the improvement in operating profit is expected to widen."