Profitability Improvement at CJ CheilJedang, Last Year's Sales Reach 22.3525 Trillion KRW... 19.7% Growth Year-on-Year

Annual Sales Exceed 20 Trillion Won... Food Business Sales Also Soaring

[Asia Economy Reporter Choi Saeng-hye] CJ CheilJedang has achieved simultaneous improvements in profitability and financial structure.

On the 12th, CJ CheilJedang announced through its earnings report that last year's sales grew 19.7% compared to the previous year, reaching KRW 22.3525 trillion, and operating profit increased by 7.7% to KRW 896.9 billion (consolidated basis). This is the first time annual sales (consolidated basis) have exceeded KRW 20 trillion. Net borrowings decreased by more than KRW 2 trillion compared to the end of the previous quarter, significantly improving the financial structure.

The Food Business Division recorded sales of KRW 8.0105 trillion, a 51.9% increase compared to the same period last year. From the second quarter, Schwans' performance was fully reflected, and sales of key domestic and overseas products increased, resulting in significant growth. Global processed food sales reached KRW 3.1539 trillion, more than four times that of the previous year. Excluding Schwans (sales of about KRW 2.2 trillion), other global processed food sales also increased by more than 40% due to strong performances in China and Vietnam. As a result, last year the global sales ratio of food exceeded 50%, securing the status of a genuine ‘global food company.’

Domestically, CJ CheilJedang solidified its overwhelming No. 1 position in Home Meal Replacement (HMR). Recently launched major HMR products such as ‘Bibigo Juk’ and ‘Bibigo Soup Dishes,’ as well as core products like Hetbahn, recorded average double-digit growth rates in sales.

The Bio Business Division, which focuses on feed amino acids and food seasoning materials, posted sales of KRW 2.7631 trillion, slightly increased despite adverse factors such as African Swine Fever (ASF). The high value-added food seasoning material ‘nucleic acid’ further strengthened its overwhelming global No. 1 position, with both sales volume and prices rising, and the sales base for specialty products such as ‘arginine’ expanded. Although lysine, one of the main products, was strategically reduced due to ASF and deteriorating global market conditions, profitability improved significantly compared to the previous year through portfolio diversification centered on high-profit products. The bio business operating profit increased by about 20% year-on-year to KRW 232.7 billion, recording the highest operating profit margin of 8.4% among all business divisions.

CJ Feed&Care (formerly the Biological Resources Division, feed + livestock) adjusted domestic and overseas feed sales channels focusing on profitability, recording sales of KRW 1.9932 trillion, about 8% less than the previous year. However, efficiency centered on high-margin sales channels and increases in pork prices in Vietnam and broiler prices in Indonesia helped the fourth-quarter operating profit nearly double year-on-year.

Remarkable achievements were also made in improving the financial structure, an area where full efforts were concentrated in the second half of last year. Excluding the logistics division (CJ Logistics), CJ CheilJedang’s net borrowings as of the end of 2019 were about KRW 4.8 trillion, down more than KRW 2 trillion from KRW 6.9 trillion at the end of the third quarter. This is close to the net borrowings of KRW 4.5 trillion at the end of 2018, before the Schwans acquisition. A CJ CheilJedang official explained, “We were able to drastically improve the financial structure by liquidating idle assets such as the Gayang-dong site at high value and successfully raising capital from overseas subsidiaries.”

CJ CheilJedang stated, “This year, we will focus on ‘innovative growth’ based on strengthened profitability and a super-gap competitiveness.” They plan to change the management paradigm through qualitative growth, concentrate capabilities on core products and businesses, and build a solid foundation that is resilient to external environmental changes through structural improvements. They will also continue to pursue future new growth engines based on value added generated internally.

For the Food Business Division, domestic operations will focus on business structure improvement based on ‘selection and concentration,’ while globally, they plan to maximize acquisition effects through synergy with Schwans and maintain the growth trend of processed foods. The Bio Business Division will also expand production and sales of high-profit products such as nucleic acid and tryptophan, and focus on strengthening cost competitiveness for major products such as lysine and methionine based on world-class global R&D competitiveness.

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