KTH Reports 5.6 Billion KRW Net Loss in Q1 Due to COVID-19 Impact on Film Industry

Net Loss Expanded 10-Fold
Operating Profit Increased Over 10 Times
Content Slump... Commerce and ICT Remain Steady

[Asia Economy Reporter Cha Min-young] KTH, which operates K Shopping, posted sluggish results in the first quarter as its content business, including films, was directly hit by the impact of the novel coronavirus disease (COVID-19).

KTH announced on the 14th that it recorded a net loss of 5.6 billion KRW in the first quarter of this year, widening its deficit from a loss of 500 million KRW in the previous year. On the other hand, sales during the same period increased by 12.6% year-on-year to 81.7 billion KRW, and operating profit surged by 1,289.3% to 1 billion KRW.

The net loss this time was mainly due to delays and cancellations of theatrical releases of investment films caused by COVID-19. In fact, sales in the content business division amounted to only 10.6 billion KRW, down 34.8% from the previous year. Due to the nature of the content industry, which proactively sets aside provisions, the deficit widened due to the impact of copyright asset valuation and increased recognition of corporate tax expenses. The content business division plans to enhance profitability by strengthening copyrights in non-film genres such as animation and series in the future.

However, commerce business sales recorded 52.1 billion KRW, up 31.6% from the same period last year, setting a new quarterly sales record. Based on channel competitiveness, the sales scale of tangible products centered on health, hygiene, and food categories expanded. Operating profit also continued to be in the black at 4.2 billion KRW, following the previous quarter. Accordingly, the company plans to further expand its growth base by operating key product groups such as the fashion category and strengthening the product lineup for the summer season, while also reinforcing its mobile core business by expanding mobile live broadcasts to three times a week.

Sales in the information and communication technology (ICT) business division increased by 13.6% year-on-year to 19 billion KRW. The expansion of orders for 5G-related group businesses such as IM (Immersive Media) and connected cars drove the sales increase. The company plans to further advance its existing projects and increase external orders from outside the group in the future.

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