HiteJinro Recovers 2 Trillion KRW in Sales After 7 Years, Strong Performance Continues

[Asia Economy Reporter Song Hwajeong] As HiteJinro recovered its sales to 2 trillion won last year, securities firms also forecast that HiteJinro's strong performance will continue this year.

HiteJinro recorded consolidated sales of 2.035 trillion won and an operating profit of 88.2 billion won last year. Sales increased by 7.9% compared to the previous year, but operating profit decreased by 2.4%. In addition, it recorded a net loss of 42.8 billion won, turning to a deficit. It is the first time in seven years since 2012 that HiteJinro's sales exceeded 2 trillion won.

In the fourth quarter of last year, sales increased by 18.4% to 558.6 billion won, and operating profit rose by 85.5% to 32.7 billion won. Samsung Securities researcher Jo Sanghoon analyzed, "Operating profit fell short of consensus by 16%, which is due to bonuses and promotional expenses incurred from favorable business conditions, and net profit turned to a loss as contingent liability provisions were reflected." Soju sales increased by 21% due to nationwide market share growth, new product effects, and a reflexive benefit from the boycott of Japanese products, while beer sales increased by 32%, offsetting the sluggish sales of imported beer and Filite with Terra.

Lee Kyungshin, a researcher at Hi Investment & Securities, said, "It is necessary to focus on the fact that both beer and soju achieved meaningful sales improvements rather than somewhat disappointing profits," adding, "Costs incurred during the market share growth phase can be interpreted as investments for mid- to long-term brand and dominance." The researcher added, "Also, even if the cost input period is somewhat extended compared to market expectations, considering the fixed cost leverage effect from volume expansion, volatility caused by cost occurrence can be minimized at the increased profit level, so related risks can be interpreted as limited."

There is a forecast that profit improvement will be in full swing from this year. The researcher said, "2019 was the first year when mid- to long-term structural improvements began, and 2020 will be the year when meaningful profit growth becomes visible based on this." Park Sangjun, a researcher at Kiwoom Securities, said, "Thanks to the rising market shares of Terra and Jinro, high sales growth is expected to continue in the mid-term," adding, "In particular, the gap in market share with the number one in beer is expected to narrow to about 4 percentage points this year, increasing expectations for reclaiming the number one market share."

This content was produced with the assistance of AI translation services.