[Click eStock] "Cheil Worldwide Expected to Re-enter Growth Phase in Second Half Earnings"

[Asia Economy Reporter Eunmo Koo] KB Securities forecasted that Cheil Worldwide's growth rate slowed in the first quarter of this year due to a downturn in the advertising market, but it is expected to show a recovery trend from the second half of the year, with the second quarter being the bottom.

Cheil Worldwide recorded an operating gross profit of 257.2 billion KRW, up 1.8% year-on-year, and an operating profit of 30.5 billion KRW, down 5.1%, in the first quarter of this year. Dongryun Lee, a researcher at KB Securities, explained in a report on the 29th, "Domestically, despite the slowdown in the advertising market, the increase in affiliate media and digital volume led to a 6.9% growth, while consolidated subsidiaries only grew 0.4% due to sluggishness in regions such as Europe and China, which were heavily affected by COVID-19. The North American region grew 21.2% due to an increase in digital advertising volume centered on affiliates after establishing a Dallas base." He also explained, "Operating profit fell 5.1% as labor costs from proactive hiring at the end of last year led to margin decline."

Cheil Worldwide's performance is expected to bottom out in the second quarter based on profit growth rate and re-enter a recovery trend from the second half of the year. KB Securities estimated that the operating gross profit for the second quarter will increase 1.3% year-on-year to 311.9 billion KRW, while operating profit will decrease 12.9% to 60.4 billion KRW.

The shift to a digital-centered portfolio is evaluated as a factor that raises expectations for mid- to long-term growth. Researcher Lee said, "Although operating profit is inevitably expected to decline this year due to poor performance in the first half, expectations for mid- to long-term growth potential have rather increased due to the rapid trend changes centered on digital. Cheil Worldwide has continuously invested in digital new businesses over recent years, and the strengthening of digital portfolios by client companies in response to non-face-to-face environments is expected to act as an opportunity factor for Cheil Worldwide."

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