Cheil Worldwide Leads Q1 'Relative Outperformance' by Accelerating Digital Transformation

The digital segment's gross profit ratio increased by 2%p from the previous quarter to 41%

[Asia Economy Reporter Geum Bo-ryeong] Cheil Worldwide is analyzed to have relatively held up its first-quarter performance by accelerating digital transformation.

According to Hyundai Motor Securities on the 1st, Cheil Worldwide recorded sales of 681.2 billion KRW and an operating profit of 30.5 billion KRW in the first quarter. Compared to the previous year, sales decreased by 16.1%, and operating profit decreased by 5.2%.

The headquarters showed a gross profit increase of 6.9% year-on-year to 58.4 billion KRW due to an increase in captive advertisers' volume despite the impact of COVID-19. The consolidated subsidiaries grew in emerging markets such as the Middle East and Latin America, but due to sluggishness in China and other regions, the gross profit grew by only 0.4% year-on-year to 198.7 billion KRW.

Hwang Seong-jin, a researcher at Hyundai Motor Securities, said, "Despite internal and external uncertainties caused by COVID-19, the first-quarter performance is evaluated to have relatively held up," adding, "Overall, consumption and advertising markets remained negative, but the reduction in retail and promotion was offset by a shift to digital advertising."

The digital segment's gross profit ratio expanded by 2 percentage points from the previous quarter to 41%. Although major digital subsidiaries such as Pungtai and TBG experienced negative growth, digital marketing conversion centered on major advertisers accelerated, resulting in a 10% growth compared to the previous quarter.

Kim Hoe-jae, a researcher at Daishin Securities, said, "Cheil Worldwide has been responding to growing digital sectors such as dot-com (.com) and e-commerce within captives, and as of the first quarter this year, the digital share of gross profit expanded to 41%," adding, "Since the untact era will continue after COVID-19 and corporate marketing will shift mainly to digital, the COVID-19 situation could rather act as an opportunity for Cheil Worldwide in the mid to long term."

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