CJ Freshway Transfers General Food Ingredients Business to Freshone

Streamlining Overlapping Projects and Enhancing Management Efficiency
Expecting Profitability Expansion of Subsidiary CJ Freshwon

[Asia Economy Reporter Seungjin Lee] Jung Seongpil, who moved from CJ Foodville to CJ Freshway as CEO, has started restructuring by eliminating overlapping businesses and establishing the identity of subsidiaries to improve the company’s structure. All general food material distribution (RS) business will be transferred to Freshone, which has a well-established regional distribution network, while CJ Freshway will focus solely on franchise (FC) business and catering services.

According to the food industry on the 9th, CJ Freshway, which recently began the RS business transfer process, plans to fully focus on its core businesses by eliminating overlapping business areas within the year and making a turnaround in performance.

The RS business distributes food materials to small-scale franchises or general self-employed businesses nationwide, but since everything was managed from the Seoul headquarters, efficiency was low, leading to calls for internal improvements. Accordingly, CJ Freshway plans to transfer the business to Freshone, which operates logistics warehouses and business sites by region nationwide, to increase the efficiency of the RS business and enhance profitability by focusing on FC and catering businesses.

It is also expected to improve the profitability of Freshone, which has long been considered a “pain point.” As of 2019, most of Freshone’s business sites recorded operating losses, making profitability improvement an urgent task. By taking over the entire RS business worth 40 billion KRW this time, Freshone is expected to expand its sales scale and improve profitability.

CJ Freshway is also undergoing structural improvements of the RS business itself ahead of the transfer. Starting this month, it has begun notifying contract terminations to low-profitability contracted companies nationwide. Locations that do not generate appropriate operating margins will be decisively reorganized. CJ Freshway is expected to continue efforts to improve operational efficiency. CEO Jung led intensive restructuring and achieved financial structure improvements while serving as CEO of CJ Foodville in 2018.

Meanwhile, CJ Freshway posted an operating loss of 3.54569 billion KRW last year due to the slump in group catering caused by the COVID-19 pandemic. It turned to a loss after recording a 58 billion KRW profit in 2019. The net loss for the period was 42.51769 billion KRW, reversing from a net profit of 9.58749 billion KRW the previous year. Sales decreased by 18.87% to 2.4785 trillion KRW.

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